Question

For each of the following transactions (a) through (c) for Catena's Marketing Company, prepare the adjusting entry. The process includes (1) determining if revenue was earned or an expense was incurred, (2) determining whether cash was received or paid in the past or will be received or paid in the future, and (3) computing the amount of the adjustment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers to nearest whole dollar value.)

1. Estimated electricity usage at $280 for December; to be paid in January of next year.
2. On September 1 of the current year, loaned $6,300 to an officer who will repay the loan principal and interest in one year at an annual interest rate of 13 percent.
3. Owed wages to 28 employees who worked three days at $130 each per day at the end of the current year. The company will pay employees at the end of the first week of next year.

Answer 1

Journal

Date	Account title	Debit	Credit
Dec. 31 (a)	Electricity expense	280
	Electricity expense payable		280
	(To record electricity expense for the month of December)
Dec. 31 (b)	Interest receivable	$273
	Interest revenue		$273
	(To record interest revenue)
Dec. 31 (c)	Wages expense	$10,920
	Wages payable		$10,920
	(To record wages expense)

Interest revenue = Amount loaned x Interest rate x Time period

= 6,300 x 13% x 4/12

= $273

Wages payable on December 31 = Number of employees x Wages per employee per day x Number of days

= 28 x 130 x 3

= $10,920

= $10,920

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