Question

Envirocan Resources prepares adjusting entries monthly. In reviewing the accounts on March 31, Envirocan Resources discovered the following a. Interest of $1,110 had accrued on the note payable as at March 31. It is to be paid on April 2 b. Unpaid and unrecorded salaries at March 31 totalled $33.450. The $33.450 plus salaries of $22,500 for the first four days of April were paid on April 4. c. The March telephone bill for $500 is unpaid and unrecorded at March 31. It is to be paid on April 15. d. Envirocan normally pays rent in three month installments. At March 31, rent of $4,800 per month had not been paid for February March, or April. Rent of $4,800 was correctly accrued at the end of February. The balance owing plus rent for May June and July was paid on April 26. e. Envirocan pays commissions to the technicians at the rate of 4% of services performed. During March, total services performed were $470,000. Commissions are unrecorded and unpaid at March 31. Commissions are paid on 15th of the following month Required: Using the information provided above, prepare the monthly adjusting journal entries at March 31 along with the appropriate subsequent cash entries.

Answer 1

Adjusting Entries

Date	Account Titles	Debit	Credit
Mar-31	Interest Expense	$             1,110
	Interest Payable		$              1,110
	(Interest accrued but not paid)
Mar-31	Salaries Expense	$           33,450
	Salaries Payable		$            33,450
	(Salaries due for the month)
Mar-31	Utility Expense	$                500
	Accounts Payable		$                  500
	(Telephone bill recorded)
Mar-31	Rent Expense	$             4,800
	Rent Payable		$              4,800
	(Rent accrued for march)
Mar-31	Commission expense	$           18,800		=470000*4%
	Commission payable		$            18,800
	(Commission due to be paid)

Cash entries

Date	Account Titles	Debit	Credit
Apr-02	Interest Payable	$             1,110
	Cash		$              1,110
	(Interest paid in cash)
Apr-04	Salaries Payable	$           33,450
	Salaries Expense	$           22,500
	Cash		$            55,950
	(Salaries paid in cash)
Apr-15	Accounts Payable	$                500
	Cash		$                  500
	(Cash paid for telephone bill)
Apr-26	Rent Payable	$             9,600		=4800*2
	Prepaid Rent	$           19,200		=4800*4
	Cash		$            28,800
	(Rent paid in cash)
Apr-15	Commission payable	$           18,800
	Cash		$            18,800
	(Commission paid in cash)