Question

a 4:38 PM Wed Jan 29 < o 5 Too of Lecture 5 ADM1340 Jan 29, 2020 at 4:05 PM Hangzhou Corporation had the following selected transactions in the month of November. The company adjusts its accounts monthly. 1. Hangzhou has a biweekly payroll of $6,000. Salaries are normally paid every second Monday for work completed for the two preceding weeks. Employees work a five-day week, Monday through Friday. Salaries were last paid Monday. November 26, and will be paid next on Monday, December 10. 2. The company has a 7%, $20,000 bank loan payable due September 1 of the next year. Interest is payable on the first day of each following month, and was last paid on November 1. 3. At the end of November, Hangzhou has $1,000 of invoices for services provided to customers that have not yet been sent. It mails these invoices on December 1, and collects the amounts due on December 21. 4. At the end of November, the company earned $10 interest on the cash in its bank account. The bank deposited this amount in the company's cash account on December 1. 5. At the end of November, it was estimated that the company owed $1.000 of income tax. This amount was paid on December 18. (a) Prepare the adjusting journal entry required at November 30. (b) Prepare the journal entry to record the subsequent cash transaction in December 1. DR salaries expense 3000 con salaries payable BODO Die 10 m os salaules expense 3000

Answer 1

Adjusting entries are the entries made for adjusting the revenue and expenses for the period in which they are incurred. It is done at the end of the accounting period after preparing the unadjusted trail balance.

Ans a	Date	Account Title	Debit	Credit
	Nov 30	Salaries and Wages Expense	$6,000
		Salaries and Wages Payable		$6,000
		(To record salaries accrual)
	Nov 30	Interest Expense [[$20000 x 7%)/12]	$117
		Interest Payable		$117
		(To record interest accrual)
	Nov 30	Accounts Receivable	$1,000
		Service Revenue		$1,000
		(To record service revenue)
	Nov 30	Interest Receivable	$10
		Interest Income		$10
		(To record accrual of interest income)
	Nov 30	Income Tax Expense	$1,000
		Income Tax Payable		$1,000
		(To record income tax expense)
Ans b	Date	Account Title	Debit	Credit
	Dec 1	Interest Payable	$117
		Cash		$117
		(To record payment of interest)
	Dec 1	Cash	$10
		Interest Receivable		$10
		(To record interest paid by bank)
	Dec 10	Salaries and Wages Expense	$6,000
		Salaries and Wages Payable	$6,000
		Cash		$12,000
		(To record payment of salaries)
	Dec 18	Income Tax Payable	$1,000
		Cash		$1,000
		(To record income tax payment)
	Dec 21	Cash	$1,000
		Accounts Receivable		$1,000
		(To record collection form customer)