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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 :


Accounts and Explanation




Unearned Revenue


Service Revenue


To record service revenue earned


Salaries Expense


Salaries Payable


To record accrued salaries expense


Accounts Receivable


Service Revenue


To record service revenue earned


Interest Expense


Interest Payable


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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