Question

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.)

Answer 1

Answer :

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	-
		Supplies	-	$4,400
		[To Record supplies expense]	-	-
3	July 31	Rent expense [2,800*1/4]	$700	-
		Prepaid rent	-	$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	-
		Service Revenue	-	$4,750
		[To Record revuenue for unearned]	-	-
7	July 31	Maitenance and repairs expense	$2,200	-
		Accounts payable		$2,200
		[To Record accrued maintenance and repairs expense]	-	-

Explanations

Given that Adjusting entries prepared monthly.

So, that interest revenue, rent expense and depreciation expense calculated for a month.