Exercise 4-17 Greenock Limited has the ollowing information available for accrua

Question

Exercise 4-17 Greenock Limited has the ollowing information available for accruals or the year ended December 3, 2017·The company ad usts its accounts annually. 1. The December utility bill for $425 was unrecorded on December 31. Greenock paid the bill on January 11. Greenock is open 7 days a week and employees are paid a total of $3,500 every Monday for a 7-day (Monday-Sunday) workweek. December 31 is a Thursday, so employees will have worked 4 days (Monday, December 28-Thursday, December 31) that they have not been paid for by year-end. Employees will be paid next on January 4 Greenock signed a $45,000 5% bank loan on November 1, 2016, due in 2 years. Interest is payable on the first day of each o o in monthlFor examp in e est incurred during November is paid on December 1.) Greenock receives a ee rom Pizza Shop next door or all pizzas sold to customers using Greenock's ac lit. The amount owed in December s so wni? zas o ill pay on January 4. (Hint: Use the Service Revenue account.) Greenock rented some of its unused warehouse space to a client for $6,000 a month, payable the first day of the following month. It received the rent for the month of December on January 2 2. 3. 4. 5.

Explanation / Answer

Date Event Assets = Liabilities + Stockholders' Equity Cash + Accounts Receivable = Accounts Payable + Interest Payable + Salaries Payable + Common Stock + Retained Earnings Revenue - Expenses - Dividend 2017 Dec.31 1 425 425 Utility Expense Dec.31 2 2000 2000 Salary Expense Dec.31 3 188 -188 Interest Expense Dec.31 4 300 300 Service revenue Dec.31 5 6000 6000 Rent Revenue Date Event Assets = Liabilities + Stockholders' Equity Cash + Accounts Receivable = Accounts Payable + Interest Payable + Salaries Payable + Common Stock + Retained Earnings Revenue - Expenses - Dividend 2018 Jan.11 1 -425 -425 Jan.4 2 -2000 -2000 Jan.1 3 -188 -188 Jan.4 4 300 -300 Jan.2 5 6000 -6000 Salary Payable : Weekly Salaries   = $3,500 Period                      = 7 days Salary per day        = $500 Salary for 4 days unpaid = $2,000 ($500 x 4) Interest Payable Value of note          = $45,000 Rate of interest        = 5% Monthly interest    = $188 ($45,000*5% / 12)

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