Question

Vigeland Company completed the following transactions during Year 1. Vigeland’s fiscal year ends on December 31. Jan. 15 Purchased and paid for merchandise. The invoice amount was $14,900; assume a perpetual inventory system. Apr. 1 Borrowed $896,000 from Summit Bank for general use; signed a 10-month, 6% annual interest-bearing note for the money. June 14 Received a $22,000 customer deposit for services to be performed in the future. July 15 Performed $4,350 of the services paid for on June 14. Dec. 12 Received electric bill for $26,560. Vigeland plans to pay the bill in early January. 31 Determined wages of $18,000 were earned but not yet paid on December 31 (disregard payroll taxes).

• 1

  Purchased and paid for merchandise. The invoice amount was $14,900; assume a perpetual inventory system.

• 2

  Borrowed $896,000 from Summit Bank for general use; signed a 10-month, 6% annual interest-bearing note for the money.

• 3

  Received a $22,000 customer deposit for services to be performed in the future.

• 4

  Performed $4,350 of the services paid for on June 14.

• 5

  Received electric bill for $26,560. Vigeland plans to pay the bill in early January.

• 6

  Determined wages of $18,000 were earned but not yet paid on December 31 (disregard payroll taxes).

Vigeland Company completed the following transactions during Year 1. Vigeland’s fiscal year ends on December 31.

Jan.	15		Purchased and paid for merchandise. The invoice amount was $14,900; assume a perpetual inventory system.
Apr.	1		Borrowed $896,000 from Summit Bank for general use; signed a 10-month, 6% annual interest-bearing note for the money.
June	14		Received a $22,000 customer deposit for services to be performed in the future.
July	15		Performed $4,350 of the services paid for on June 14.
Dec.	12		Received electric bill for $26,560. Vigeland plans to pay the bill in early January.
	31		Determined wages of $18,000 were earned but not yet paid on December 31 (disregard payroll taxes).

2. Prepare the adjusting entries required on December 31

Answer 1

ANSWER:

Required: Adjusting entries required on December 31

Date	Particulars	Debit	Credit
Dec 31	Salaries and Wages Expense	18,000
	To Salaries and Wages Payable		18,00
Dec 31	Interest Expense [896,000 * 6% * (9 / 12)]	40,320
	To Interest Payable		40,320

Answer 2

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