3 Exercise#13-ACCRUED EXPENSES: Cinema Inc. borrows $15,000 at 8% interest for m
ID: 2341640 • Letter: 3
Question
3 Exercise#13-ACCRUED EXPENSES: Cinema Inc. borrows $15,000 at 8% interest for months on June1 Instructions: A. Prepare the journal entry for the borrowing of funds on June 1. B. Prepare note payable? the adjusting entry to accrue the monthly interest expense at June 30 on the Exercise#14-ACCRUED EXPENSES: Dune Corporatio five-day work week on Fridays. June 30 falls on a Thursday; financial statement will prepared that day. Instructions: n pays its employees $1,000 per be A. What is the adjusting entry for the accrual of salaries and wages for the last week of the month of June? B. What is the journal entry for the payment of salaries and wages on July 1?Explanation / Answer
Answer
Annual Interest = $ 15,000 x 8% = $ 1,200
1 month Interest for June = $ 1,200 x 1 months/12 months = $ 100
Entry ‘A’
Date
Accounts title
Debit
Credit
A
Cash
$ 15,000.00
Notes Payable
$ 15,000.00
(Funds borrowed for 3 months)
Entry ‘B’
Date
Accounts title
Debit
Credit
B
Interest Expense
$ 100.00
Interest Payable
$ 100.00
(Interest accrued for 1 month)
$ 1000 is for 5 days work.
For per day = $ 1000 / 5 = $ 200
--Accrued Salaries & Wages for 4 days [Monday, Tuesday, Wednesday, Thursday] = $ 200 x 4 days = $ 800
Entry ‘A’
Date
Accounts title
Debit
Credit
A
Salaries & Wages expense
$ 800.00
Salaries & Wages payable
$ 800.00
(4 days expenses accrued)
Entry ‘B’
July 1 payment will include 4 days of June and 1 day of July. Total Payment = $ 1,000
Date
Accounts title
Debit
Credit
A
Salaries & Wages expense
$ 200.00
Salaries & Wages payable
$ 800.00
Cash
$ 1,000.00
(5 days salaries paid)
Date
Accounts title
Debit
Credit
A
Cash
$ 15,000.00
Notes Payable
$ 15,000.00
(Funds borrowed for 3 months)
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