Question

On August 1, 2018, the beginning of its current fiscal year, the following opening account balances, listed in alphabetical order, were reported by Tobique Ltd.

Accounts payable		$2,500		Interest receivable		20
Accounts receivable		4,740		Note receivable, due October 31, 2018		4,000
Accumulated depreciation—equipment		2,030		Retained earnings		6,040
Cash		5,520		Salaries payable		1,460
Common shares		12,000		Supplies		1,030
Equipment		10,100		Unearned revenue		1,380

During August, the following summary transactions were completed.

Aug. 1		Paid $440 cash for advertising in local newspapers. Advertising flyers will be included with newspapers delivered during August and September. (Hint: Use the Prepaid Advertising account.)
3		Paid August rent $380. (Hint: Use the Prepaid Rent account.)
6		Received $3,040 cash from customers in payment of accounts.
10		Paid $2,910 for salaries due employees, of which $1,450 is for August and $1,460 is for July salaries payable.
13		Received $4,100 cash for services performed in August.
15		Purchased additional equipment on account $1,910.
17		Paid creditors $1,910 of accounts payable due.
22		Purchased supplies on account $720.
24		Paid salaries $3,110.
27		Performed services worth $4,400 on account and billed customers.
29		Received $750 from customers for services to be provided in the future.
31		Declared and paid a $550 dividend.

(B)

Tobique records adjustments monthly. Adjustment data for the month of August are as follows:

1.		One month’s worth of advertising services have been received.
2.		The August rent has expired.
3.		Accrued salaries payable are $1,670.
4.		Depreciation for the month is $203.
5.		Supplies on hand at August 31 are $1,000.
6.		Services were performed to satisfy $790 of unearned revenue.
7.		One month of interest revenue related to the $4,000 note receivable has accrued. The note was issued on June 30 and is due October 31 and has a 6% annual interest rate. Interest is due at maturity.
8.		Income tax of $290 is estimated to be owed for the month of August.

Prepare the August adjusting journal entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)

	Date	Account Titles and Explanation	Debit	Credit
1.	Aug. 31

Answer 1

Adjusting entry

No	Date	account titles and explanation	Debit	Credit
1	Aug 31	Advertising expense (440/2)	220
		Prepaid advertising		220
2	Aug 31	Rent expense	380
		Prepaid rent		380
3	Aug 31	Salaries expense	1670
		Salaries payable		1670
4	Aug 31	Depreciation expense	203
		Accumulated depreciation-equipment		203
5	Aug 31	Supplies expense (1030+720-1000)	750
		Supplies		750
6	Aug 31	Unearned revenue	790
		Service revenue		790
7	Aug 31	Interest receivable (4000*6%*1/12)	20
		Interest revenue		20
8	Aug 31	Income tax expense	290
		Income tax payable		290