Question

The ledger of Sunland Company on July 31, 2022, includes the selected accounts below before adjusting entries have been prepared. Debit Credit $22,000 Investment in Note Receivable Supplies 21,000 2,800 Prepaid Rent Buildings 290,000 Accumulated Depreciation-Buildings $150,000 Unearned Service Revenue 10,500 An analysis of the company's accounts shows the following. 1. The investment in the notes receivable earns interest at a rate of 6% per year. Supplies on hand at the end of the month totaled $16,600. 2. 3. The balance in Prepaid Rent represents 4 months of rent costs. 4. Employees were owed $3,100 related to unpaid salaries and wages. 5. Depreciation on buildings is $4,320 per year. 6. During the month, the company satisfied obligations worth $4,750 related to the Unearned Services Revenue. 7. Unpaid maintenance and repairs costs were $2,200. 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

Adjusting Entries:

	Date	Account title and Explanation	Debit	Credit
1	July 31	Interest receivable	$110
		Interest revenue [22,000 x 6% x (1/12)]		$110
		[To record accrued interest revenue]
2	July 31	Supplies expense [21,000-16,600]	$4,400
		Supplies		$4,400
		[To record supplies expense]
3	July 31	Rent expense [2,800 x 1/4]	$700
		Prepaid rent		$700
		[To record rent expense]
4	July 31	Salaries and wages expense	$3,100
		Salaries and wages payable		$3,100
		[To record accrued salaries and wages]
5	July 31	Depreciation expense-buildings [4,320 x 1/12]	$360
		Accumulated depreciation-buildings		$360
		[To record depreciation expense]
6	July 31	Unearned service revenue	$4,750
		Service revenue		$4,750
		[To record revenue from unearned]
7	July 31	Maintenance and repairs expense	$2,200
		Accounts payable		$2,200
		[To record accrued maintenance and repairs expense]

Explanations:

Given that, Adjusting entries prepared monthly.

So that, Interest revenue, Rent expense and Depreciation expense calculated for a month.