Demello & Associates records adjusting entries on an annual
basis. The company has the following information available on
accruals that must be recorded for the year ended December 31,
2017:
1. Demello has a $9,600, 6% note receivable with a customer. The
customer pays the interest on a monthly basis on the first of the
month. Assume the customer pays the correct amount each
month.
2. Demello pays its employees a total of $6,200 every second
Wednesday. Employees work a five-day week, Monday to Friday, and
are paid for all statutory holidays. December 31, 2017, is a
Sunday. Employees were paid on Wednesday, December 27, 2017 up to
the Friday of the prior week.
3. Demello has a contract with a customer where it provides
services prior to billing the customer. On December 31, 2017, this
customer owed Demello $3,250. Demello billed the customer on
January 7, 2018, and collected the full amount on January 18,
2018.
4. Demello received the $450 December utility bill on January 10,
2018. The bill was paid on its due date, January 22, 2018. 5.
Demello has a $20,400, 5% note payable. Interest is paid every six
months, on October 31 and April 30. Assume that Demello made the
correct interest payment on April 30, 2017 and October 31,
2017.
Prepare the journal entries to record the related cash transactions
in 2018. Assume all payments and receipts are made as
indicated.
JOURNAL ENTRIES IN THE BOOKS OF DEMELLO AND ASSOCIATES | ||||
S.NO. | DATE | PARTICULARS | DEBIT($) | CREDIT($) |
1 | 31-12-2017 | CUSTOMER'S A/C | $48.00 | |
TO INTEREST RECEIVED ON NOTE | $48.00 | |||
01-01-2018 | CASH A/C | $48.00 | ||
TO CUSTOMER'S A/C | $48.00 | |||
2 | 31-12-2017 | SALARIES AND WAGES A/C | $3,100.00 | |
TO SALARIES AND WAGES PAYABLE A/C | $3,100.00 | |||
10-01-2018 | SALARIES AND WAGES A/C | $3,100.00 | ||
SALARIES AND WAGES PAYABLE A/C | $3,100.00 | |||
TO CASH A/C | $6,200.00 | |||
3 | 31-12-2017 | NO ENTRY | ||
07-01-2018 | CUSTOMER'S A/C | $3,250.00 | ||
TO SERVICE REVENUE A/C | $3,250.00 | |||
18-01-2018 | CASH A/C | $3,250.00 | ||
TO CUSTOMER'S A/C | $3,250.00 | |||
4 | 31-12-2017 | UTILITY EXPENSES A/C | $450.00 | |
TO UTILITY EXPENSES PAYABLE A/C | $450.00 | |||
22-01-2018 | UTILITY EXPENSES PAYABLE A/C | $450.00 | ||
TO CASH A/C | $450.00 | |||
5 | 31-12-2017 | INTEREST EXPENSE ON NOTE A/C | $170.00 | |
TO INTEREST EXPENSE PAYABLE A/C | $170.00 | |||
30-04-2018 | INTEREST EXPENSE ON NOTE A/C | $340.00 | ||
INTEREST EXPENSE PAYABLE A/C | $170.00 | |||
TO CASH A/C | $510.00 |
Demello & Associates records adjusting entries on an annual basis. The company has the following information...
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