Question

The unadjusted trial balance for Kind Matters as December 31 is provided on the trial balance tab.

Information for adjustments is as follows:
As of December 31, employees had earned $1,800 of unpaid and unrecorded salaries. The next payday is January 4, at which time $2,250 of salaries will be paid.
Cost of supplies still available at December 31 total is $1,900.
An interest payment is made every three months. The amount of unrecorded accrued interest at December 31 is $2,000. The next interest payment, at an amount of $2,400, is due on January 15.
Analysis of Unearned Revenue shows $2,200 remaining unearned at December 31.
Accrues $12,300 of revenue for services provided. Payment will be collected on January 31.
Depreciation expense is $23,000
Requirement
Prepare the required adjusting entries and closing entries for Kind Matters

Answer 1

To adjust Kind Matters' records, entries must be made for salaries, supplies, interest, unearned revenue, accrued revenue, and depreciation. Then, closing entries are made to transfer all revenue and expense accounts' balances to Retained Earnings.

Step-by-step explanation:

To prepare the required adjusting entries for Kind Matters, we would need to create adjustments for salaries, supplies, interest, unearned revenue, accrued revenue, and depreciation. Here are the necessary adjusting entries at December 31:

• Salaries Expense: $1,800 Debit to record earned but unpaid salaries.
  

  Salaried Payable: $1,800 Credit

• Supplies Expense: Adjust to record the cost of supplies used.
  

  Supplies: Credit the remaining balance of $1,900

• Interest Expense: $2,000 Debit to accrue interest.
  

  Interest Payable: $2,000 Credit

• Unearned Revenue: $2,200 Debit to record amount earned.
  

  Service Revenue: $2,200 Credit

• Service Revenue: $12,300 Debit to accrue revenue for services provided.
  

  Accounts Receivable: $12,300 Credit

• Depreciation Expense: $23,000 Debit to record depreciation.
  

  Accumulated Depreciation: $23,000 Credit

The closing entries would involve closing all revenue and expense accounts to Retained Earnings. This includes debiting all Revenue accounts and crediting all Expense accounts, then closing out Dividends or Withdrawals, if applicable.