Kathy Gannon is the new owner of Kathy’s Computer Services. At the end of July 2

Question

Kathy Gannon is the new owner of Kathy’s Computer Services. At the end of July 2014, her first month of ownership, Kathy is trying to prepare monthly financial statements. She has the following information for the month.

Prepare the adjusting entries needed at July 31, 2014. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

No.

Account Titles and Explanation

Debit

Credit

  

1. At July 31, Kathy owed employees $2,780 in salaries that the company will pay in August. 2. On July 1, Kathy borrowed $17,160 from a local bank on a 11-year note. The annual interest rate is 10%. 3. Service revenue unrecorded in July totaled $4,270.

Explanation / Answer

Journal Entry Date Particulars Dr Amount Cr Amount 1 Salary Exp.                                            Dr. 2780 To Salary Payable 2780 (Salary for the M/o July is due) 2 Interest Exp.                                       Dr. 143    To Accrued Interest - Note 143 (interest Due on 11 year Note fro the m/o July-14) 3. Accounts Receivables                     Dr. 4270    To Service Revenue 4270 (service revenue recognised for the m/o July-14)

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