Question

Crane Company has the following information available for accruals for the year ended December 31, 2020. The company adjusts its accounts annually. 1. The December utility bill for $430 was unrecorded on December 31. Crane paid the bill on January 11. Crane is open 7 days a week and employees are paid a total of $4,900 every Monday for a 7-day (Monday-Sunday) workweek. December 31 is a Thursday, so employees will have worked 4 days (Monday, December 28-Thursday, December 31) that they have not been paid for by year-end. Employees will be paid next on January 4. 3. Crane signed a $47,100,4% bank loan on November 1, 2020, due in 2 years. No interest payments were made in 2020. Interest for 2020 was pa Crane receives a fee from Pizza Shop next door for all pizzas sold to customers using Crane's facility. The amount owed for December is $340, which Pizza Shop will pay on January 4. (Hint: Use the Service Revenue account.) 5. Crane rented some of its unused warehouse space to a client for $6,400 a month, payable the first day of the following month. It received the rent for the month of December on January 2. For each situation, prepare the adjusting entry required at December 31. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.) Debit Credit Date Account Titles and Explanation Dec. 31 (To record payable account) Dec. 31 (To record accrued salaries and wages) Dec 31 (To record interest used) Dec. 31 (To record service account) Dec. 31 (To record rent account)

Answer 1

Adjusting Entries for Dec 31,2020:

	Date	Account title and Explanation	Debit	Credit
1	Dec.31	Utilities expense	$430
		Utilities payable		$430
		[To record accrued utilities expense]
2	Dec.31	Salaries and Wages expense (4,900 x 4/7)	$2,800
		Salaries and Wages payable		$2,800
		[To record accrued wages expense]
3	Dec.31	Interest expense (47,100 x 4% x 2/12)	$314
		Interest payable		$314
		[To record accrued interest expense]
4	Dec.31	Accounts receivable	$340
		Service revenue		$340
		[To record accrued service revenue]
5	Dec.31	Rent receivable	$6,400
		Rent revenue		$6,400
		[To record accrued rent revenue]

Subsequent entries in 2021:

	Date	Account title and Explanation	Debit	Credit
1	Jan.11	Utilities payable	$430
		Cash		$430
		[To record payment of utilities]
2	Jan.4	Salaries and Wages payable	$2,800
		Salaries and Wages expense	$2,100
		Cash		$4,900
		[To record payment of wages]
3	Jan.1	Interest payable	$314
		Cash		$314
		[To record payment of interest]
4	Jan.4	Cash	$340
		Accounts receivable		$340
		[To record cash received from customers]
5	Jan.2	Cash	$6,400
		Rent receivable		$6,400
		[To record cash received for rent revenue]