Question

The ledger of Sheffield Corp. on July 31, 2022, includes the selected accounts below before adjusting entries have been prepared. Debit Credit Investment in Note Receivable $18,000 Supplies 24,000 Prepaid Rent 3,400 Buildings 270,000 Accumulated Depreciation-Buildings $135,000 Unearned Service Revenue 11,000 An analysis of the company's accounts shows the following. 1. The investment in the notes receivable earns interest at a rate of 12% per year. 2. Supplies on hand at the end of the month totaled $17,800. 3. The balance in Prepaid Rent represents 4 months of rent costs. 4. Employees were owed $3,200 related to unpaid salaries and wages. 5. Depreciation on buildings is $4,320 per year. 6. During the month, the company satisfied obligations worth $4,600 related to the Unearned Services Revenue. 7. Unpaid maintenance and repairs costs were $2,000. Prepare the adjusting entries at July 31 assuming that adjusting entries are made monthly. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Answer 1

No	Date	Account Titles and Explanation	Debit	Credit
1	July 31	Interest receivable	$180
		Interest revenue		$180
		( To record interest revenue)
2	July 31	Supplies expense	$6,200
		Supplies		$6,200
		( To record supplies expense)
3	July 31	Rent expense	$850
		Prepaid rent		$850
		( To record rent expense)
4	July 31	Salaries and wages expense	$3,200
		Salaries and wages payable		$3,200
		( To record salaries and wages expense)
5	July 31	Depreciation expense	$360
		Accumulated depreciation - Building		$360
		( To record depreciation expense)
6	July 31	Unearned service revenue	$4,600
		Service revenue		$4,600
		( To record unearned service revenue)
7	July 31	Miscellaneous expense	$2,000
		Miscellaneous expense payable		$2,000
		( To record maintenance and repairs expense)

1.

Interest revenue on note receivable = Note receivable x interest rate x time period

= 18,000 x 12% x 1/12

= $180

2.

Supplies expense = Unadjusted Supplies - Supplies, Ending

= 24,000-17,800

= $6,200

3.

Rent expense for 1 month = 3,400 x 1/4

= $850

5.

Depreciation expense on Building for 1 month = 4,320 x 1/12

= $360

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