General Journal Entries and Explanations for Balance Day Adjustments

This assignment provides a detailed solution for general journal entries and balance day adjustments as of June 30th. It includes adjusted journal entries for various transactions, such as electricity bills, prepaid insurance, wage expenses, and cash received for unearned service fees, and sales commission revenue. Each entry is accompanied by a clear explanation referencing accounting principles and relevant literature, detailing the rationale behind debits and credits to ensure adherence to the double-entry system. The assignment covers the accounting treatment of expenses and revenues and the importance of recognizing them in the correct accounting period, referencing the principles of revenue recognition. The solution references accounting textbooks to support the entries and explanations.

NAME
COURSE TITLE
DATE
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General Journal Entry
Adjusted journal entry for closing balances as at 30th June
Transaction Date ACCOUNT Debit Credit
a. June 29 Electricity bill expense
Utility payable
$823
$823
b. September 1 Insurance expense
Prepaid insurance
$945
$945
c. July 2 Wage expense
Wage payable
$1200
$1200
d. June 29 Cash at bank
Service prepaid
$400
$400
e. July Account receivable
Sales commission
revenue
$550
$550
2

Explanation
The following is explanation for adjusted journal entries for accounting period ending 30th June;
a. The electricity was used by the business within the accounting period that was closed on
30th June. The electricity bill is an expense that is to be settled in a later date. Therefore, it
will be an account payable entry which is a liability to the business and debit of
electricity bill expense (Edmonds et al., 2013). This is debited as electricity expense and
utility payable is credited in the business journal. Once the amount is settled on July, the
electricity expenses account will then be credited while utility payable account will be
debited. This will ensure the accounting principle of double entry is adhered to (Scott,
2015).
b. The insurance was prepaid on September for 12 months which means only 9 months
insurance expense has been incurred for the period ending 30th June. Therefore, the
journal entry for balance adjustment will debit insurance expense as at 30th June and
credit prepaid insurance at the same period when adjusting the journal balances
(Weygandt et al., 2010).
$1260/12*9= $945
c. The employees’ expense was incurred within the accounting period and has to be
adjusted and be accounted for the period ending 30th June. The entry will be wage
expense of $1200 and wage payable liability of $1200 that is to be settled in the next
accounting period.
d. The business receives cash at bank for service fees not delivered. This amount will be
recorded to reflect cash at bank received for services not delivered as at 30th June. This
will therefore be shown by debiting cash at bank and crediting service fees as a liability
to be met before the revenue is earned in a future date. The adjusted journal will therefore
show cash at bank amounting to $400 debited and service fees credited amounting to
$400 to show liability that the business has to settle before the revenue is earned.
e. The revenue from Phillips Commission Sales was earned on June and therefore should be
recognized and adjusted for the period ending 30th June. According to Weil, Schipper,
and Francis, (2013), revenue should be recognized when earned. The journal adjustment
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will therefore credit revenue earned and debit account receivable. Revenue earned of
$550 will be credited while account receivable of $550 will be debited for the accounting
period ending 30th June.
REFERENCES
Edmonds, T.P., McNair, F.M., Olds, P.R. and Milam, E.E., (2013). Fundamental financial
accounting concepts. New York, NY: McGraw-Hill Irwin.
Scott, W.R., (2015). Financial accounting theory (Vol. 2, No. 0, p. 0). Prentice Hall.
Weygandt, J.J., Kimmel, P.D., Kieso, D. and Elias, R.Z., (2010). Accounting principles. Issues in
Accounting Education, 25(1), pp.179-180.
Weil, R.L., Schipper, K. and Francis, J., (2013). Financial accounting: an introduction to
concepts, methods and uses. Cengage Learning.
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