Question

Review Problem Harriet's Hats Ltd. Balance Sheet December 31, 2018 $ 8,000 3,000 Assets Current Assets: Cash Accounts Receivable Prepaid Rent Inventories Total Current Assets Property, Plant and Equipment (net) Total Assets 500 1.000 $12,500 16,500 $29.000 Liabilities and Owner's Equity Current Liabilities: Accounts Payable Accrued Wages Accrued Interest Unearned Revenue Notes Payable Total Current Liabilities Common Stock Retained Earnings Total Shareholders' Equity Total Liabilities and Shareholders' Equity $ 2,250 170 90 250 2,700 $ 5,460 15,000 8,540 $23,540 $29,000 1. On September 1, 2019, the company issued a short-term note for $3,000 and on the same date retired the note that was outstanding at the beginning of the 2019. The old note had a 10 percent interest rate, had been issued on September 1, 2013, and required semi-annual interest payment on February 28 and August 31. The new note carried an 8 percent interest rate with similar payment terms. 2. Rent payments of $1,800 each were made on March 1 and September 1. The payments were for rent on office building and were prepaid for six months. 3. Sales employees were paid $12,000 in salaries during 2019. Records indicate that salaries earned for the last week of December amounted to $250 and would be paid on January 7, 2015 (a two week pay period). 4. Gift cards, good for one year, sold during 2019: $10,100. On 12/31/2019 discovers gift cards redeemed during the year: $9,650. REQUIRED: Using the information in the balance sheet and information provided above, prepare 2019 journal entries, including the adjusting entries on 12/31/2019, to record transactions related to interest on note, rent, salaries, and gift cards.

Answer 1

1) Rollout 3000 Journal entries Bank 31013} 3000! Note payable (New note assued on Sept:30,2019) aus Jorda Note payable lasa 700 Interest expense - Bank Book ooo o Jorgen b 2835 Cold note retired and interes (paid) 135 180 3) Interest expense AK - Interest payable Coutstanding isterst expense at the end of the year to Wonoloa co on new note) @ 89-pa) do 4) Interest expense ALC Wain4510 Interest payable now who 90 هم |۱۱ را اور رانا د 135 ندارد این رویدا Coutstarding expense and 2 months current year interest Paid)

2. a) prepaid Renta Bonklcash DO 1200 Qyoo b) Rent expense prepaid rent Bank op to 360 (Total payment of 3600 in i 2019 includes 6 months prepared (3600x 2)current year espaces a to fond เรน รถ to jest portato a) salaries expense woges payable to Q10 Cash 09. Geo 12000 evious year Salary quo JBL and current year some dowing Jevgi- est amount of salary paid) Lou b) Salaries expense ID E 250 250 ages payable to dosta 90 (Being previous year Salaryqu ( salaries accrued are out standing at the year end)

(Q Bank 10100 sales revenue (Being gift cards sold) 10100 (b) Sales revenue 450 1 Gifts to be redeemed 450 Being Gifts to be redeemed in next year) (2) sales revenue 9650 profit and loss - 9650 statement ( Being sales revenue to be recognised for the current year)