The ledger of Sunland Company on July 31, 2017, includes the selected accounts below before adjusting entries have been prepared. Debit Credit Investment in Note Receivable $22,000 Supplies 21,000 Prepaid Rent 2,800 Buildings 290,000 Accumulated Depreciation—Buildings $150,000 Unearned Service Revenue 10,500
An analysis of the company’s accounts shows the following.
1. The investment in the notes receivable earns interest at a rate of 6% per year.
2. Supplies on hand at the end of the month totaled $16,600.
3. The balance in Prepaid Rent represents 4 months of rent costs.
4. Employees were owed $3,100 related to unpaid salaries and wages.
5. Depreciation on buildings is $4,320 per year.
6. During the month, the company satisfied obligations worth $4,750 related to the Unearned Services Revenue.
7. Unpaid maintenance and repairs costs were $2,200.
Prepare the adjusting entries at July 31 assuming that adjusting entries are made monthly. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
|No||Date||Account Title and Explanation||Debit||Credit|
|1||July 31||Interest Receivable||$110||-|
|Interest Revenue [22,000*6%*(1/12)]||-||$110|
|[To Record accrued interest revenue]||-||-|
|2||July 31||Supplies expense [21,000 - 16,600]||$4,400||-|
|[To Record supplies expense]||-||-|
|3||July 31||Rent expense [2,800*1/4]||$700||-|
|[To Record rent expense]||-||-|
|4||July 31||Salaries and wages expense||$3,100||-|
|Salaries and wages payable||-||$3,100|
|[To Record accrued salaries and wages]||-||-|
|5||July 31||Depreciation expense - buildings [4,320 *1/12]||$360||-|
|Accumulated depreciation - buildings||-||$360|
|[To Record depreciation expense]||-||-|
|6||July 31||Unearned service revenue||$4,750||-|
|[To Record revuenue for unearned]||-||-|
|7||July 31||Maitenance and repairs expense||$2,200||-|
|[To Record accrued maintenance and repairs expense]||-||-|
Given that Adjusting entries prepared monthly.
So, that interest revenue, rent expense and depreciation expense calculated for a month.
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