Prepare the following adjustments in good journal entry format. (a) The beginnin
ID: 2488567 • Letter: P
Question
Prepare the following adjustments in good journal entry format. (a) The beginning balance of the Supplies account was $245. During the month the company bought additional supplies in the amount of $735. At the end of the month a physical inventory showed $343 of unused supplies. (b) The company has a Note Payable in the amount of $17,000 at an APR of 12%. The note will be paid at the end of 6 months. The interest expense for the month needs to be recorded. (c) There are two employees at the North Park Store. One is a manager that gets paid on the 15th of every month for his work during the first part of the month and on the 1st of the following month for the second part of the month. His monthly salary is $3,500. The other employee is an administrative assistant who gets a week pay of $650. The last day of the month fell on Thursday. (d) The unearned revenue account shows a balance of $46,000. According to the manager 75% of that amount has been earned. (e) At the end of the month $5,700 of services had been performed but not yet billed.
Explanation / Answer
Adjusting Journal Entries:
S.No
Accounts Title and explanation
Debit
Credit
(a)
Supplies Expense
$ 637
Supplies
$ 637
(Being supplies used )
Workings:
Supplies used = Beginning balance + Supplies Purchased - ending balance
= (245 + 735 -343) = $637
(b)
Interest Expense
$ 170
Interest Payable
$ 170
(Being interest on note payable recorded for the month)
Workings:
= 17000 * 12% /12 = $170
(c)
Salary Expense
$ 2,400
Salary Payable
$ 2,400
(Being salary expense accrued for the month)
Workings:
Manager's Salary = (for second part of the month) =3500 *15 /30 = $1750
Assistant's Salary = ( for last week of the month) = $650
Total Salary Payable = 1750 + 650 = $2400
(d)
Revenue Earned ($46000*75%)
$ 34,500
Unearned Revenue
$ 34,500
(Being earned revenue recorded)
(e)
Accounts Receivables
$ 5,700
Service Revenue
$ 5,700
(Being Revenue earned )
Adjusting Journal Entries:
S.No
Accounts Title and explanation
Debit
Credit
(a)
Supplies Expense
$ 637
Supplies
$ 637
(Being supplies used )
Workings:
Supplies used = Beginning balance + Supplies Purchased - ending balance
= (245 + 735 -343) = $637
(b)
Interest Expense
$ 170
Interest Payable
$ 170
(Being interest on note payable recorded for the month)
Workings:
= 17000 * 12% /12 = $170
(c)
Salary Expense
$ 2,400
Salary Payable
$ 2,400
(Being salary expense accrued for the month)
Workings:
Manager's Salary = (for second part of the month) =3500 *15 /30 = $1750
Assistant's Salary = ( for last week of the month) = $650
Total Salary Payable = 1750 + 650 = $2400
(d)
Revenue Earned ($46000*75%)
$ 34,500
Unearned Revenue
$ 34,500
(Being earned revenue recorded)
(e)
Accounts Receivables
$ 5,700
Service Revenue
$ 5,700
(Being Revenue earned )