William Bryant is the new owner of Ace Computer Services. At the end of August 2

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William Bryant is the new owner of Ace Computer Services. At the end of August 2012, his first month of ownership, Bryant is trying to prepare monthly financial statements. Below is some information related to unrecorded expenses that the business incurred during August.

E3-8 (Adjusting Entries) William Bryant is the new owner of Ace Computer Services. At the end of August 2012, his first month of ownership, Bryant is trying to prepare monthly financial statements. Below is some information related to unrecorded expenses that the business incurred during August. 1. At August 31, Bryant owed his employees salaries and wages that will be paid on September 1 in the amount of $2,900 2. At the end of the month he had not yet received the month's utility bill. Based on past experience, he estimated the bill would be approximately: $600 3. On August 1, Bryant borrowed $60,000 from a local bank on a 15 -year mortgage. The annual interest rate is 8% 4. A telephone bill in the amount of $117 covering August charges is unpaid at August 31.
Instructions:
Prepare the adjusting journal entries as of August 31, 2012. 1 Account Title SALARIES AND WAGES Amount
Account Title Salaries and Wages Expense Amount Text / Memo line 2 Account Title MORTGAGE Amount
Account Title MORTGAGE EXPENSE
Amount Text / Memo line 3 Account Title UTILITIES Amount
Account Title UTILITIES EXPENSE Amount Text / Memo line 4 Account Title TELEPHONE BILL Amount
Account Title TELEPHONE BILL EXPENSE
Amount Text / Memo line

Explanation / Answer

1. DR Wages Expense 2,584
CR Wages Payable 2,584

2. DR Utility Expense 653
CR Account Payable 653

3. DR Interest Expense 234 --> (0.08/12 * 35,100)
CR Interest Payable 234

4. DR Utility expense 201
CR Account Payable 201

There you go. Hope that helps! :)

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