Question

Envirocan Resources prepares adjusting entries monthly In reviewing the accounts on March 31, Envirocan Resources discovered the following a. Interest of $1110 had accrued on the note payable as at March 31. It is to be paid on April 2 b. Unpaid and unrecorded salaries at March 31 totalled $33.450. The $33,450 plus salaries of $22,500 for the first four days of April were paid on April 4 c. The March telephone bill for $500 is unpaid and unrecorded at March 31. It is to be paid on April 15. d. Envirocan normally pays rent in three month installments. At March 31, rent of $4,800 per month had not been paid for February March, or April. Rent of $4,800 was correctly accrued at the end of February. The balance owing plus rent for May, June, and July was paid on April 26 e. Envirocan pays commissions to the technicians at the rate of 4% of services performed. During March, total services performed were $470,000. Commissions are unrecorded and unpaid at March 31 Commissions are paid on the 15th of the following month References Required: Using the information provided above, prepare the monthly adjusting journal entries at March 31 along with the appropriate subsequent cash entries

Answer 1

(a)	March 31	Interest Expense a/c Dr.	$1,110
		To Interest accrued a/c		$1,110
		[Being interest accrued on notes payable for the month of March. ]
	April 2	Interest accrued a/c Dr.	$1,110
		To Cash a/c		$1,110
		[Being accrued interest on notes payable for march paid.]
(b)	March 31	Salaries a/c Dr.	$33,450
		To Outstanding Salaries a/c		$33,450
		[Being unpaid salaries for march.]
	April 4	Outstanding salaries a/c Dr.	$33,450
		Salaries a/c Dr.	$22,500
		To Cash a/c		$55,950
		[Being outstanding salaries for March and salaries upto April 4 paid.]
(c)	March 31	Telephone expense a/c Dr.	$500
		To Outstanding telephone expense a/c		$500
		[Being unpaid telephone expense for March.]
	April 15	Outstanding telephone expense a/c Dr.	$500
		To Cash a/c		$500
		[Being telephone expense unpaid for March paid.]
(d)	March 31	Rent expense a/c Dr.	$4,800
		To Accrued rent a/c		$4,800
		[Being rent accrued for the month of March. ]
	April 26	Rent a/c Dr.	$4,800
		Accrued rent a/c Dr.	$9,600
		Prepaid rent a/c Dr.	$14,400
		To Cash a/c		$28,800
		[Being rent of $4,800 for April, accrued rent @$4,800 per month for February and March and advance rent for may, June and July @$4,800 per month paid.]
(e)	March 31	Commission a/c Dr.	$18,800
		To Outstanding commission a/c		$18,800
		[Being technicians' commission @4% of services performed unpaid. $470,000 × 4% = $18,800]
	April 15	Outstanding commission a/c Dr.	$18,800
		To cash a/c		$18,800
		[Being commission for services performed in March paid. ]