Desoto Company must make three adjusting entries on December 31, 2019.

Supplies used, $5,500 (supplies totaling $9,000 were purchased on December 1, 2019, and debited to the Supplies account).

Expired insurance, $4,100; on December 1, 2019, the firm paid $24,600 for six months' insurance coverage in advance and debited Prepaid Insurance for this amount.

Depreciation expense for equipment, $2,900.

Required:

Prepare the journal entries for these adjustments and post the entries to the general ledger accounts.

1. Debit Supplies expense $5,500

Credit Supplies account $5,500

This will reduce the supplies balance to $3,500 when posted.

2. Debit Insurance expense $4,100

Credit Prepaid Insurance $4,100

The prepaid insurance balance will be $20,500

3. Debit Depreciation expense $2,900

Credit Accumulated depreciation $2,900

Explanation:

When supplies are purchased, debit supplies and credit cash or account payable. When the supplies are used up, credit supplies account and debit supplies expense.

When insurance is prepaid, debit prepaid insurance and credit Cash. On use of the insurance cover, debit Insurance expense, credit prepaid insurance.

When an asset becomes available for use, depreciation will be recognized as the asset is used by debiting depreciation expense and crediting accumulated depreciation.