Question

Prepare the following adjusting entries at August 31 for Walgreens.

(a) Interest on notes payable of $300 is accrued.
(b) Services earned 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.

Answer 1

Adjusting entries for Walgreens include: accruing interest on notes payable, recognizing unbilled services revenue, recording salaries and wages earned but not yet paid, and accounting for bad debt expense. These adjustments ensure the financial statements accurately reflect the company's financial position at month-end.

Step-by-step explanation:

To accurately reflect the financial position of Walgreens at the end of August, the following adjusting entries would be made:

• Interest Accrued: Debit Interest Expense $300, Credit Interest Payable $300.
• Unbilled Services: Debit Accounts Receivable $1,400, Credit Service Revenue $1,400.
• Salaries and Wages Earned: Debit Salaries and Wages Expense $700, Credit Salaries and Wages Payable $700.
• Bad Debt Expense: Debit Bad Debt Expense $900, Credit Allowance for Doubtful Accounts $900.

These entries account for expenses that have been incurred but not yet paid or recorded, as well as revenues that have been earned but not yet billed. It is crucial for maintaining the accuracy of the financial statements under the accrual basis of accounting.