Question

Consider the following situations: a. Business receives $3,200 on January 1 for 10-month service contract for the period January 1 through October 31. b. Total salaries for all employees is $3,600 per month. Employees are paid on the 1st and 15th of the month. c. Work performed but not yet billed to customers for the month is $1,600. d. The company pays interest on its $16,000, 4% note payable of $53 on the first day of each month. Assume the company records adjusting entries monthly. Journalize the adjusting entries needed as of January 31.

Answer 1

Adjusting entries are the entries made for adjusting the revenue and expenses for the period in which they are incurred. It is done at the end of the accounting period after preparing the unadjusted trail balance.

Date	Account Title	Debit	Credit
Jan 31	Unearned Service Revenue [$3200/10x1]	$320
	Service Revenue		$320
	(To record service revenue)
Jan 31	Salaries and Wages Expense	$1,800
	Salaries and Wages Payable		$1,800
	(To record salaries accrual)
Jan 31	Accounts Receivable	$1,600
	Service Revenue		$1,600
	(To record service revenue)
Jan 31	Interest Expense	$53
	Interest Payable		$53
	(To record interest accrual)