Journalize the Necessary Year-End Adjusting Entries Based on the Following

question 29

Essay

Journalize the necessary year-end adjusting entries based on the following account balances before adjustments.
$\begin{array}{c}\text {Trial Balance (partial)}\\\text {December 31, 20--}\\\\\begin{array}{lr}\text { Cash } & 12,340 \\\text { Supplies } & 2,100 \\\text { Prepaid Insurance } & 1,800 \\\text { Equipment } & 34,000\\\text { Accumulated Depreciation-Equipment } & & 8,000 \\\text { Accounts Payable } & & 6,430 \\\text { Wages Expense } & 17,333& \\\text { Insur ance Expense } & 3,333 &\end{array}\end{array}$

a.
The inventory of supplies on hand at December 31,20--,was $230.
b.
The 4-month insurance premium of $1,800 was purchased on December 1,20--.
c.
The $34,000 of equipment was purchased on January 1,two years ago.It has a salvage value of $2,000.Straight-line depreciation was used to compute depreciation at the end of last year.
d.
Wages accrued at December 31,20--,were $3,700.

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Definitions:

Financial Leverage

The use of borrowed money (debt) to amplify the potential return on investment.

Break-even EBIT

The level of earnings before interest and taxes (EBIT) at which a company neither makes a profit nor incurs a loss.

Target Capital Structure

Refers to the mix of debt, preferred stock, and common equity that a company aims to hold to fund its operations and maximize its value.

WACC

Weighted Average Cost of Capital - a calculation of a firm's cost of capital in which each category of capital is proportionately weighted.