Question

On April 1, the company hired an attorney for a flat monthly fee of $2,000. Payment for April legal services was made by the company on May 12. Prepare the required adjusting entry, if any.

Answer 1

The Journal entries are as follows:

(i) On April 1,

Legal fees expenses A/c Dr.$2,000

To Legal fees payable $2,000

(To record the legal fees expenses)

(ii) On May 12,

Legal fees payable A/c Dr. $2,000

To Cash A/c $2,000

(To record the payment of legal fees)