Answered

Westonci.ca is the Q&A platform that connects you with experts who provide accurate and detailed answers. Experience the ease of finding quick and accurate answers to your questions from professionals on our platform. Experience the convenience of finding accurate answers to your questions from knowledgeable experts on our platform.

Prepare the adjusting entries at July 31, 2022, assuming that adjusting entries are made monthly.

Selected accounts before adjusting entries:

| Account | Debit | Credit |
|---|---|---|
| Investment in Note Receivable | [tex]$20,000 | |
| Supplies | $[/tex]24,000 | |
| Prepaid Rent | [tex]$3,600 | |
| Buildings | $[/tex]250,000 | |
| Accumulated Depreciation-Buildings | | [tex]$140,000 |
| Unearned Service Revenue | | $[/tex]11,500 |

Analysis of accounts:

1. The investment in the notes receivable earns interest at a rate of 6% per year.
2. Supplies on hand at the end of the month totaled [tex]$18,600.
3. The balance in Prepaid Rent represents 4 months of rent costs.
4. Employees were owed $[/tex]3,100 related to unpaid salaries and wages.
5. Depreciation on buildings is [tex]$6,000 per year.
6. During the month, the company satisfied obligations worth $[/tex]4,700 related to the Unearned Service Revenue.
7. Unpaid maintenance and repairs costs were $2,300.

Prepare the adjusting entries for July 31.

(If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Sagot :

GinnyAnswer
Certainly! Here’s a detailed, step-by-step solution for the adjusting entries required for Armour Lake Lumber Supply on July 31, 2022:

1. Interest Earned on Note Receivable:
- The investment in note receivable earns interest at a rate of 6% per year.
- For one month, the interest earned can be calculated as: [tex]\(\frac{\$20,000 \times 0.06}{12} = \$100\)[/tex]
- Adjusting entry:
- Interest Receivable: \[tex]$100 - Interest Revenue: \$[/tex]100

2. Supplies Used:
- Supplies at the beginning were \[tex]$24,000 and at the end of the month were \$[/tex]18,600.
- Supplies used: [tex]\(\$24,000 - \$18,600 = \$5,400\)[/tex]
- Adjusting entry:
- Supplies Expense: \[tex]$5,400 - Supplies: \(-\$[/tex]5,400\)

3. Prepaid Rent Expense:
- Prepaid rent represents 4 months of rent costs: \[tex]$3,600. - Monthly rent expense: \(\frac{\$[/tex]3,600}{4} = \[tex]$900\) - Adjusting entry: - Rent Expense: \$[/tex]900
- Prepaid Rent: [tex]\(-\$900\)[/tex]

4. Unpaid Salaries and Wages:
- Employees were owed \[tex]$3,100 related to unpaid salaries and wages. - Adjusting entry: - Salaries and Wages Expense: \$[/tex]3,100
- Salaries and Wages Payable: \[tex]$3,100 5. Depreciation Expense on Buildings: - Annual depreciation is \$[/tex]6,000. Monthly depreciation expense: [tex]\(\frac{\$6,000}{12} = \$500\)[/tex]
- Adjusting entry:
- Depreciation Expense: \[tex]$500 - Accumulated Depreciation-Buildings: \$[/tex]500

6. Unearned Service Revenue:
- The company satisfied obligations worth \[tex]$4,700 during the month. - Adjusting entry: - Unearned Service Revenue: \(-\$[/tex]4,700\)
- Service Revenue: \[tex]$4,700 7. Unpaid Maintenance and Repairs Costs: - Unpaid maintenance and repairs costs were \$[/tex]2,300.
- Adjusting entry:
- Maintenance and Repairs Expense: \[tex]$2,300 - Accounts Payable: \$[/tex]2,300

The summary of adjusting entries at July 31 is as follows:

1. Interest Receivable: [tex]\(\$100\)[/tex]
- Debit: Interest Receivable: \[tex]$100 - Credit: Interest Revenue: \$[/tex]100

2. Supplies Expense: [tex]\(\$5,400\)[/tex]
- Debit: Supplies Expense: \[tex]$5,400 - Credit: Supplies: \(-\$[/tex]5,400\)

3. Rent Expense: [tex]\(\$900\)[/tex]
- Debit: Rent Expense: \[tex]$900 - Credit: Prepaid Rent: \(-\$[/tex]900\)

4. Salaries and Wages Expense: [tex]\(\$3,100\)[/tex]
- Debit: Salaries and Wages Expense: \[tex]$3,100 - Credit: Salaries and Wages Payable: \$[/tex]3,100

5. Depreciation Expense: [tex]\(\$500\)[/tex]
- Debit: Depreciation Expense: \[tex]$500 - Credit: Accumulated Depreciation-Buildings: \$[/tex]500

6. Unearned Service Revenue: [tex]\(\$4,700\)[/tex]
- Debit: Unearned Service Revenue: [tex]\(-\$4,700\)[/tex]
- Credit: Service Revenue: \[tex]$4,700 7. Maintenance and Repairs Expense: \(\$[/tex]2,300\)
- Debit: Maintenance and Repairs Expense: \[tex]$2,300 - Credit: Accounts Payable: \$[/tex]2,300

These adjusting entries ensure that the financial records accurately reflect the income and expenses for the month of July 2022.
We appreciate your visit. Our platform is always here to offer accurate and reliable answers. Return anytime. Your visit means a lot to us. Don't hesitate to return for more reliable answers to any questions you may have. Get the answers you need at Westonci.ca. Stay informed with our latest expert advice.