Question

Problem 4-11A Bugatti Company has a September 30 fiscal year end and prepares adjusting entries on an annual basis. The trial balance included the following selected accounts: Accumulated depreciation Depreciation expense Interest expense Interest payable Interest receivable Interest revenue Salaries expense Salaries payable $4,150 3,050 152,000 Additional information for its September 30, 2014, year-end adjustments 1, Bugatti has a two-year, 3% note receivable for S5,200 that was issued on April 1, 2014, Interest is payable every six months, on October 1 and April 1. Principal is payable at maturity. Bugatti collected the correct amount on October 1, 2014 2. Accrued salaries as at September 30, 2014, were $2,500. Payroll totalling $2,910 was paid on October 2, 2014 3, Bugatti has a five-year, 5% note payable for $73,200 issued in 2012. Interest is payable quarterly on January 31, April 30, July 31, and October 31 each year. Bugatti paid the correct amounts in 2014. 4. Depreciation expense for the year ended September 30, 2014, was $4,150.

Answer 1

Accumulated depreciation
Date	Debit ($)	Credit ($)	Balance($)
30-Sep		4150	-4150

Interest Expenses
Date	Debit ($)	Credit ($)	Balance($)
30-Sep	3050		3050

Salaries Expenses
Date	Debit ($)	Credit ($)	Balance($)
30-Sep	152000		152000

Journal Entries
Date	Particulars	Debit ($)	Credit($)
30-Sep	Interest Receivable	78
	Interest Revenue		78
30-Sep	Salaries Expense	2500
	Salaries Payable		2500
2-Oct	Salaries Payable	2910
	Cash		2910
30-Oct	Interest Expense	915
	Interest Payable		915
30-Sep	Depreciation Expenses	4150
	Accumulated Depreciation		4150

Interest Receivable
Date	Debit ($)	Credit ($)	Balance($)
30-Sep	78		78

Interest Revenue
Date	Debit ($)	Credit ($)	Balance($)
30-Sep		78	-78

Salaries Expense
Date	Debit ($)	Credit ($)	Balance($)
Opening	152000		152000
30-Sep	2500		154500

Salaries Payable
Date	Debit ($)	Credit ($)	Balance($)
30-Sep		2500	-2500

Interest Expense
Date	Debit ($)	Credit ($)	Balance($)
Opening	3050		3050
30-Sep	915		3965

Interest Payable
Date	Debit ($)	Credit ($)	Balance($)
30-Sep		915	-915

Depreciation Expenses
Date	Debit ($)	Credit ($)	Balance($)
30-Sep	4150		4150

Accumulated depreciation
Date	Debit ($)	Credit ($)	Balance($)
Opening		4150	-4150
30-Sep		4150	-8300

Particulars	Debit ($)	Credit($)
Interest Receivable	78
Interest Revenue		78
Salaries Expense	154500
Salaries Payable		2500
Interest Expense	3965
Interest Payable		915
Depreciation Expenses	4150
Accumulated depreciation		8300

Journal Entries
Date	Particulars	Debit ($)	Credit($)
30-Sep	Interest Revenue	78
	Income Summary		78
	Closing Revenues
30-Sep	Income Summary	162615
	Salaries Expense		154500
	Interest Expense		3965
	Depreciation Expenses		4150
	Closing Expenses