Question

E3.13 (LO 2. 3) The ledger of Armour Lake Lumber Supply on July 31, 2020, includes the selected accounts below before adjusting entries have been prepared. Prepare adjusting entries from selected account data. Debit Credit Notes Payable $ 20,00 0 Supplies $ 24,00 0 Prepaid Rent 3,600 Buildings 250,000 Accumulated Depreciation Buildings 140,000 Unearned Service Revenue 11,500 An analysis of the company's accounts shows the following. • 1. The notes payable pays interest at a rate of 6% per year. • 2. Supplies on hand at the end of the month totaled $18,600. 3. The balance in Prepaid Rent represents 4 months of rent costs. 4. Employees were owed $3,100 related to unpaid salaries and wages 5. Depreciation on buildings is $6,000 per year 6. During the month, the company satisfied obligations worth $4,700 related to the Unearned Services Revenue. 7. Unpaid maintenance and repairs costs were $2,300 Instructions . . . Prepare the adjusting entries at July 31 assuming that adjusting entries are made monthly. Use additional accounts as needed

Answer 1

Answer

Transaction	General Journal	Debit	Credit
31-July	Interest expense	$100
	Interest payable		$100
	(To record interest accrued)
31-July	Supplies expense	$5,400
	Supplies		$5,400
	(To record supplies expense during the period
31-July	Rent expense	$900
	Prepaid Rent		$900
	(To record rent expense for july)
31-july	Salaries and wages expense	$3,100
	Salaries and wages expense payable		$3,100
	(To record salaries and wages expense payable)
31-July	Depreciation expense	$500
	Accumulated Depriciation Building		$500
	(To record Depriciation expense for the month
31-July	Unearned service revenue	$4,700
	Service revenue		$4,700
	(To record revenue satisfied obligations
31-July	Maintenance and repairs expense	$2,300
	Maintenance and repairs expense payable		$2,300
	(To record maintenance and repai expense payable)

Notes-

1- Interest expense accrued=20,000*6%*1/12

=$100

2-Supplies on hand=$18,600

Supplies expense to be recorded=24,000-18,600

=$5,400

3-Rent expense to be recorded for july

=3,600/4

=$900

4-Depreciation expense for the year is $6,000

Depreciation expense for july=$6,000/12=$500