Question

On June 30, the end of the current fiscal year, the following information is available to SCP Company's Accountants for making adjusting entries:

On June 30, the end of the current fiscal year, the following information is available to SCP Company's accountants for making adjusting entries: a. Among liabilities of the company is a mortgage payable in the amount of €240.000. On June 30, the accrued interest on this mortgage amounted to €12.000. b. On Friday, July 2, the company, which is a five-day workweek and pays employees weekly, will pay its regular salaried employees €19.200. C. On June 29, the company completed negotiations and signed a contract to provide monthly services to a new client at an annual rate of €3.600. d. The Supplies account shows a beginning balance of €1.615 and purchases during the year of €3.766. The end-of-year inventory reveals supplies on hand of €1.186. e. The Prepaid Insurance account shows the following entries on June 30: Beginning balance: January 1: €1.530 €2.900 €3.366 May 1: The beginning balance represents the unexpired portion of a one-year policy purchased in April of the previous year. The January 1 entry represents a new one-year policy, and the May 1 entry represents the additional coverage of a three-year policy. (Round final answer to the nearest Euro)

REQUIRED PREPARE THE ADJUSTING ENTRIES FOR EACH ITEM LISTED ABOVE

Answer 1

	b	Weekly salaries expense	€         19,200
		Daily salaries expense	€           3,840	(19200/5)
		Number of days of unpaid salaries in June	3
		Salaries of June not paid by June30	€         11,520	(3840*3)
	c	No adjusting entry is required, since no accounting transaction has taken place
	d	Supplies beginning balance	€           1,615
		Add:Purchased during the year	€           3,766
		Total Supplies available	€           5,381
		Less: Closing Balance	€           1,186
		Supplies used during the year	€           4,195
	e	Prepaid insurance balance on July 1	€           1,530
		Insurance expense from this policy	€           1,530
		Insurance expense from January1 policy	€           1,450	(2900*(6/12)
		Insurance expense from May 1 policy	€               187	(3366*(2/36)
		Total insurance expense	€           3,167
		ADJUSTING ENTRIES
Ref	DATE	ACCOUNT TITLES	DEBIT	CREDIT
a	June, 30	Interest Expense	€         12,000
		Interest Payable		€       12,000
b	June, 30	Salaries Expense	€         11,520
		Salaries Payable		€       11,520
d	June, 30	Supplies Expense	€           4,195
		Supplies		€          4,195
e	June, 30	Insurance Expense	€           3,167
		Prepaid Insurance		€          3,167