P3-32A Laughter Landscaping has the following independent cases at the end of the year on December 31, 2014

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P3-32A Journalizing adjusting entries [15–25 min]
Laughter Landscaping has the following independent cases at the end of the year on
December 31, 2014.

a. Each Friday, Laughter pays employees for the current week’s work. The amount of the
weekly payroll is $7,000 for a five-day workweek. This year December 31 falls on a
Wednesday.
b. Details of Prepaid insurance are shown in the account:

Jan 1 $4,500
Prepaid insurance

Laughter prepays a full year’s insurance each year on January 1. Record insurance
expense for the year ended December 31.

c. The beginning balance of Supplies was $4,000. During the year, Laughter purchased
supplies for $5,200, and at December 31 the supplies on hand total $2,400.

d. Laughter designed a landscape plan, and the client paid Laughter $7,000 at the start of
the project. Laughter recorded this amount as Unearned service revenue. The job will
take several months to complete, and Laughter estimates that the company has earned
60% of the total revenue during the current year.

e. Depreciation for the current year includes Equipment, $3,700; and Trucks, $1,300.
Make a compound entry.

Requirement
1. Journalize the adjusting entry needed on December 31, 2014, for each of the previous
items affecting Laughter Landscaping.