Question

Debit Credit (Adjustment a) 2019 Dec. 31 Uncollectible Accounts Expense 4,326.00 Allowance for Doubtful Accounts 4,326.00 To record estimated loss from Uncollectible accounts based on 0.68 of net credit sales, $721,000 (Adjustment b) 31 Supplies Expense 4,300.00 Supplies To record supplies used during the year (Adjustment c Insurance Expense Prepaid Insurance To record expired insurance on 1-year $4,920 policy purchased on Oct. 1 4,300.00 1,230.00 31 1,230.00 (Adjustment d) 31 Depreciation. Exp.-Store Equipment 13,900.00 Accum. Depreciation-Store Equip To record depreciation 13,900.00 (Adjustment e) Salaries Expense-office Salaries Payable To record acerued salaries for Dec. 29-31 31 2,400.00 2,400.00 (Adjustment f 31 Payroll Taxes Expense 183.60 Social Security Tax Payable Medicare Tax Payable 148.80 34.80 To record accrued payroll taxes on accrued salaries: social security, 6.2 x 2,400 $148.80; Medicare, 1.45 2,400 =$34.80 (Adjustment g) 31 Interest Expense 160.00 Interest Payable To record accrued interest on a 4-month, 6% trade note payable dated Nov. 1: $16,000 x 0.06 x 2/12 $160.00 160.00 (Adjustment h) Interest Receivable 31 246.00 246.00 Interest Income To record interest earned on 6-month, 8% note receivable dated Oct. 1: $8,200 x 0.12 x 3/12 $246.00

Answer 1

Reversing entries are prepared only for the adjusting entries for accrue income and expenses.

Therefore, the following four reversing entries will be prepared in the given case:

Record the first reversing entry required. Date General Journal Debit Credit Jan. 01, 2020 Salaries Payable 2400.00 Salaries Expense - Office 2400.00 Record the second reversing entry required Date General Journal Debit Credit Jan. 01, 2020 Social Security Tax Payable Medicare Tax Payable 148.80 34.80 Payroll Taxes Expense 183.60 Record the third reversing entry required. General Journal Debit Credit Date Jan. 01, 2020 Interest Payable 160.00 Interest Expense 160.00 Record the fourth reversing entry required General Journal Debit Credit Date 246.00 Jan. 01, 2020 Interest Income Interest Receivable 246.00