Question

Patricia's Event Planning Service (PEPS) has just prepared the unadjusted trial balance, which shows the following balances: Salary expense: Debit $8,000 Service revenues: Credit S3,000 Interest expense: 0 Late in this month, June, she began working with a new client, providing event planning services for an upcoming event. When the event is complete, in the following month, she will collect the full amount of $900 from her client. As of the end of this month, she has rendered one-third of the services covered by the contract. She usually makes accrual adjustments monthly. On the first day of January, PEPS borrowed S1,800 on a one-year note payable bearing interest at 4% per year. The note specifies that principal and interest is to be paid in full at the end of the one-year period. Make the necessary adjusting entries at the end of June.

Answer 1

Journal entries for the month of June

Amount of services rendered by the end of June =
1/3 of 900
300
Now since the payment will be made only after full services are rendered in the month of July
entry for revenue earned but not received will be recorded for the month of June
		Dr.	CR.	explanation
30-Jun	Accrued revenue	$300		this is asset as this income is now earned
	Service revenue		300	this income will be recognized even though not received
	(income earned but not received)
30-Jun	Interest expense	$6		(1800*4%)/12
	Interest payable		6
	(interest accured for the month of June on notes payable)