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3-21E

Expert-verified
Horngren'S Financial And Managerial Accounting
Found in: Page 163

Short Answer

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.

Adjusting entries are as follows :

Transactions

Accounts and Explanation

Debit

Credit

(a)

Unearned Revenue

$320

Service Revenue

$320

To record service revenue earned

(b)

Salaries Expense

$1,800

Salaries Payable

$1,800

To record accrued salaries expense

(c)

Accounts Receivable

$1,600

Service Revenue

$1,600

To record service revenue earned

(d)

Interest Expense

$53

Interest Payable

$53

To record accrued interest expense

See the step by step solution

Step by Step Solution

Step1: Calculation of Service RevenueService revenue is calculated as follows: 

Step2: Calculation of Salaries Expense

Salaries expense is calculated as follows

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