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Q3-6E_e

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Financial & Managerial Accounting
Found in: Page 146

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Short Answer

Question:Prepare year-end adjusting journal entries for M&R Company as of December 31, 2017, for each of the

following separate cases. (Entries can draw from the following partial chart of accounts: Cash; Accounts

Receivable; Interest Receivable; Equipment; Wages Payable; Salary Payable; Interest Payable; Lawn

Services Payable; Unearned Revenue; Revenue; Interest Revenue; Wages Expense; Salary Expense;

Supplies Expense; Lawn Services Expense; Interest Expense.)

a. M&R Company provided $2,000 in services to customers that are expected to pay the company sometime

in January following the company’s year-end.

b. Wage expenses of $1,000 have been incurred but are not paid as of December 31.

c. M&R Company has a $5,000 bank loan and has incurred (but not recorded) 8% interest expense of

$400 for the year ended December 31. The company will pay the $400 interest in cash on January 2

following the company’s year-end.

d. M&R Company hired a firm to provide lawn services at a monthly fee of $500 with payment occurring

on the 15th of the following month. Payment for December services will occur on January 15

following the company’s year-end.

e. M&R Company has earned $200 in interest revenue from investments for the year ended December

31. The interest revenue will be received on January 15 following the company’s year-end.

f. Salary expenses of $900 have been earned by supervisors but not paid as of December 31.

Answer:

The accounts receivable account is debited and interest revenue credited with $200

See the step by step solution

Step by Step Solution

Step-by-Step Solution  Step 1: Definition of interest revenue

The revenue generated for interest is known as interest revenue.

Step 2: Adjustment entry for interest revenue

Journal entry

Date

Particulars

Debit

Credit

December 31, 2017

Accounts Receivable

$200

Interest Revenue

$200

(Adjustment entry for accounts receivable)

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