Question

Interest of $75 has accrued during the month on a note payable. The company's adjusting entry to record this at the end of the month would be:

		debit Interest Receivable and credit Interest Revenue for $75
		debit Interest Revenue and credit Interest Receivable for $75
		debit Interest Payable and credit Interest Expense for $75
		debit Interest Expense and credit Interest Payable for $75

Our company agrees to hire a landscaping company to provide $500 in lawn services. No payment is made at the time of the agreement and no work has yet been performed by the landscaping company. The related journal entry would be:

		There would be no journal entry made at this time.
		Debit to Lawn Care Expense and credit to Accounts Payable for $500
		Debit to Lawn Care Expense and credit to Cash for $500
		Debit to Accounts Payable and credit to Cash for $500

A company's ledger shows $2,000 in the Prepaid Insurance account. The adjusting entry the company would make to record that $400 of the policy has expired by the end of the month would be:

		debit Insurance Expense and credit Prepaid Insurance for $1,600.
		debit Insurance Expense and credit Prepaid Insurance for $400.
		debit Prepaid Insurance and credit Insurance Expense for $1,600.
		debit Prepaid Insurance and credit Insurance Expense for $400.

The ledger of Jones Co. shows $4,400 in the Unearned Revenue account for services prepaid by client Hanson Co. at the beginning of the month. Three-fourths (75%) of the Hanson job was completed by the end of the month. The adjusting entry is:

		debit Service Revenue and credit Unearned Revenue for $3,300
		debit Unearned Revenue and credit Service Revenue for $1,100
		debit Unearned Revenue and credit Service Revenue for 3,300
		debit Service Revenue and credit Unearned revenue for $1,100

A company pays $2,000 in salaries to employees each Friday for 5 days of work (Monday through Saturday). If the month-end is on a Thursday, the adjusting entry will be:

		debit Salaries Payable and credit Salaries Expense for $1,600
		debit Salaries Payable and credit Salaries Expense for $400
		debit Salaries Expense and credit Salaries Payable for $1,600
		debit Salaries Expense and credit Salaries Payable for $400

Answer 1

	1)	Debit interest expense and credit interest payable
		for $75
	2)	there would be no journal entry made at this time
	3)	Debit insurance expense and credit prepaid insurance
		for $400
	4)	Debit unearned revenue and credit service revenue for $3,300
	5)	debit salaries expense and credit salaries payable for $1,600