Question

On May 1, 2018 a new business started up. Complete Adjusting Journal Entries: 1. At end of period, Accounting Department counted supplies on hand and discovered they amounted to $2,000. Supplies purchased during May cost $3,500. 2. Prepaid Insurance was purchased May 1 for $3,600. It is a 12 month policy. 3. A transaction was discovered amounting to $400 that had not been previously booked, billed or collected. 4. The Notes Payable amount of $10,000 is a one year note at 6% simple interest. The loan was effective May 1. Interest is not payable until the end of loan term. (Remember interest formula: Interest = Principal x time x rate). 5. An Advance ("Unearned Service Revenue") in the amount of $6,000 was received on May 1, 50% of the contract was completed by May 31. 6. Company employees work Monday through Friday and are paid weekly. The last day of the month is on a Thursday. Weekly payroll amounts to $3,000.

Please include Totals

Answer 1

Date	Account Titles and Explanation	Debit	Credit
May 31	Supplies Expense	1,500
	Supplies		1,500
	(3,500 - 2,000)
May 31	Insurance Expense	300
	Prepaid Insurance		300
	(3,600 x 1/12)
May 31	Accounts Receivable	400
	Service Revenue		400
May 31	Interest Expense	50
	Interest Payable		50
	(10,000 x 6% x 1/12)
May 31	Unearned Service Revenue	3,000
	Service Revenue		3,000
	(6,000 x 50%)
May 31	Salaries Expense	2,400
	Salaries Payable		2,400
	(3,000 x 4/5)