Accrual adjusting entries. The following information relates to the Wallstrom Co

Question

Accrual adjusting entries.
The following information relates to the Wallstrom Company at the end of 2017. The accounting period is the calendar year.

Instructions
Using the information given above, prepare the necessary adjusting entries at December 31, 2017.

1. Employees are paid every Friday for the five-day week ending on that day. Salaries amount to $4,000 per week. The accounting period ends on a Tuesday. 2. A note for $5,000 was received from a customer in a sales transaction on April 1, 2017. The note matures in one year and bears 8% interest. 3. On September 1, 2017, Wallstrom borrowed $10,000 cash by signing a note payable due in one year at 6% interest.

Explanation / Answer

General Journal Debit Credit 1. Salaries and Wages Expense $1,600 Salaries and Wages Payable $1,600 ($4,000 ÷ 5 = $800); ($800 × 2 = $1,600 accrued salaries) 2. Interest Receiable $300 Interest Revenue $300 ($5,000 × 8% × 9/12 = $300 accrued interest) 3. Interest Expense $200 Interest Payable $200 ($10,000 × 6% × 4/12 = $200 accrued interest)

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