Question

3-3) Andy Roddick is the new owner of Marigold Computer Services. At the end of August 2017, his first month of ownership, Roddick is trying to prepare monthly financial statements. Below is some information related to unrecorded expenses that the business incurred during August.

(a) At August 31, Roddick owed his employees $1,914 in wages that will be paid on September 1.

(b) At the end of the month, he had not yet received the month’s utility bill. Based on past experience, he estimated the bill would be approximately $629.

(c) On August 1, Roddick borrowed $30,000 from a local bank on a 15-year mortgage. The annual interest rate is 9%.

(d) A telephone bill in the amount of $106 covering August charges is unpaid at August 31.

Prepare the adjusting journal entries as of August 31, 2017, suggested by the information above. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Answer 1

Adjusting journal entry

No.	Account title and explanation	Debit	Credit
a)	Wages expense	1,914
	Wages payable		1,914
	(To record wages payable on 8/31
b)	Utilities Expense	629
	Account Payable		629
	(To record utility expense for August)
c)	Interest expense (30,000 x 9% x 1/12)	225
	Interest payable		225
	(To record interest expense for the month)
d)	Telephone Expense	106
	Account payable		106
	(To record telephone Expense for the month)