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Chapter 3: Question 9BE (page 128)

BE3-9 (L03) Prepare the following adjusting entries at August 31 for Walgreens. (a) Interest on notes payable of \(300 is accrued. (b) Services performed but unbilled total \)1,400. (c) Salaries and wages earned by employees of \(700 have not been recorded. (d) Bad debt expense for year is \)900. Use the following account titles: Service Revenue, Accounts Receivable, Interest Expense, Interest Payable, Salaries and Wages Expense, Salaries and Wages Payable, Allowance for Doubtful Accounts, and Bad Debt Expense.

Short Answer

Expert verified

The amount of salaries and wages expenses is $700.

Step by step solution

01

Meaning of Adjusting Entries

Journal entries posted at year-end so that financial statements have effects of the transaction related to the current year are called adjusting entries. These entries help in fair presentation.

02

Journal Entries

Date

Accounts and Explanation

Debit $

Credit $

August, 31

Interest expenses

$300

Interest Payable

$300

August, 31

Accounts Receivable

$1,400

Service revenue

$1,400

August, 31

Salaries and Wages expenses

$700

Salaries and Wages payable

$700

August, 31

Bad debt expenses

$900

Allowance for doubtful accounts

$900

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Most popular questions from this chapter

The financial statements of (M&S) are presented in Appendix E. The company's complete annual report, including the notes to the financial statements, is available online.

Instructions

Refer to M&S’s financial statements and the accompanying notes to answer the following questions.

(a) What were M&S’s total assets at 28 March 2015? At 29 March 2014?

(b) How much cash (and cash equivalents) did M&S have on 28 March 2015?

(c) What were M&S’s selling and marketing expenses in 2015? In 2014?

(d) What were M&S’s revenues in 2015? In 2014?

(e) Using M&S’s fi nancial statements and related notes, identify items that may result in adjusting entries for prepaymentsand accruals.

(f) What were the amounts of M&S’s depreciation and amortization expense in 2014 and 2015?

Name the accounts debited and credited for each of the following transactions.

  1. Billing a customer for work done.
  2. Receipt of cash from customer on account.
  3. Purchase of office supplies on account.
  4. Purchase of 15 gallons of gasoline for the delivery of truck.

LaBouche Corporation owns a warehouse. On November 1, it rented storage space to a lessee (tenant) for 3 months for a total cash payment of $2,400 received in advance. Prepare LaBouche’s November 1 journal entry and the December 31 annual adjusting entry.

E3-2 (L02) (Corrected Trial Balance) The following trial balance of Wanda Landowska Company does not balance. Yourreview of the ledger reveals the following. (a) Each account had a normal balance. (b) The debit footings in Prepaid Insurance,Accounts Payable, and Property Tax Expense were each understated \(100. (c) A transposition error was made in AccountsReceivable and Service Revenue; the correct balances for Accounts Receivable and Service Revenue are \)2,750 and \(6,690,respectively. (d) A debit posting to Advertising Expense of \)300 was omitted. (e) A \(1,500 cash drawing by the owner was debited to Owner’s Capital and credited to Cash.

WANDA LANDOWSKA COMPANYTRIAL BALANCEAPRIL 30, 2017

Debit (\)) Credit (\()Cash \) 4,800Accounts Receivable 2,570Prepaid Insurance 700Equipment \( 8,000Accounts Payable 4,500Property Taxes Payable 560Owner’s Capital 11,200Service Revenue 6,960Salaries and Wages Expense 4,200Advertising Expense 1,100Property Tax Expense 800

Total \)20,890 $24,500

Prepare a correct trial balance.

Do the following events represent business transactions?

Explain your answer in each case

  1. A computer is purchased on account.
  2. A customer returns merchandise and is given credit on account.
  3. A prospective employee is interviewed
  4. The owner of the business withdraws cash from the business for personal use.
  5. Merchandise is ordered for delivery next month.
See all solutions

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