Question

Prepare the adjusting journal entries for the following transactions.

1. Supplies for office use were purchased during the year for $620, of which $160 remained on hand (unused) at year-end.
2. Interest of $310 on a note receivable was earned at year-end, although collection of the interest is not due until the following year.
3. At year-end, salaries and wages payable of $4,200 had not been recorded or paid.
4. At year-end, one-half of a $2,600 advertising project had been completed for a client, but nothing had been billed or collected.
5. Re-deemed a gift card for $660 of services.

Answer 1

Answer and Explanation:

The adjusting entries are shown below:

1. Supplies expense $460 ($620 - $160)

To supplies $460

(being supplies expense is recorded)

2. Interest receivable $310

To Interest revenue $310

(Being interest revenue is recorded)

3. wages expense $4,200

To wages payable $4,200

(Being wages expense is recorded)

4. Account receivable $1,300 (50% of $2,600)

To Service revenue $1,300

(Being service revenue is recorded)

5. Unearned revenue $660

To Service revenue $660

(Being service revenue is recorded)