Question

Elana's Traveling Veterinary Services, Inc., completed its first year of operations on December 31. All of the year's entries have been recorded except for the following: a. On March 1 of the current year, the company borrowed $61,440 at a 10 percent interest rate to be repaid in five years. b. On the last day of the current year, the company received a $480 utility bill for utilities used in December. The bill will be paid in January of next year. Required: 1. What is the annual reporting period for this company? Annual reporting period to 2. Prepare the required adjusting entry for transactions (a) and (b). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Calculate requirements as follows: D E January 1 to December 31 Credit A B с 1 2 Annual reporting period 3 4. S.No. Date Account Title & Explanation 5 Dec-31 Interest expense 6 Interest payable 7 8 b Dec-31 Utilities expense 9 Utilities payable Debit $ 5,120 $ 5,120 $ 480 $ 480 Calculations: A B с D E 1 2 Annual reporting period January 1 to December 31 3 4 S.No. Date Account Title & Explanation Debit Credit 5 a 11658 Interest expense =61440*10%*10/12 6 Interest payable =D5 7 8 b 11658 Utilities expense 480 9 Utilities payable =D8