On April 1, the company retained an attorney for a flat monthly fee of $1,500. P
ID: 2465247 • Letter: O
Question
On April 1, the company retained an attorney for a flat monthly fee of $1,500. Payment for April legal services was made by the company on May 12. A $520,000 note payable requires 9 3% annual interest or $4,030 to be paid at the 20th day of each month The interest was last paid on April 20 and the next payment is due on May 20 As of April 30. $1,343 of interest expense has accrued. Total weekly salaries expense tor all employees is $ 11,000. This amount is paid at the end of the day on Friday of each five-day workweek April 30 tails on Tuesday of this year, which means that the employees had worked two days since the last payday. The next payday is May 3. The above three separate situations require adjusting journal entries to prepare financial statements as of April 30. For each situation, present both the April 30 adjusting entry and the subsequent entry during May to record the payment of the accrued expenses. On April 1, the company retained an attorney for a flat monthly fee of $1,500. Payment for April legal services was made by the company on May 12.Explanation / Answer
Date
General Journal
Debit
Credit
Apr. 30
Legal Expenses
1,500
Legal fees payable
1,500
May 12
Legal fees payable
1,500
Cash
1,500
Apr. 30
Interest expense
1,343
Interest payable
1,343
May 20
Interest payable
1,343
Interest expense
2,687
Cash
4,030
Apr. 30
Salaries expense
4,400
Salaries payable
4,400
May 3
Salaries payable
4,400
Salaries expense
2,200
Cash
6,600
Calculations
Interest expense = 520,000 x 9.3% x 10/30 = $1,343
Salaries expense = 11,000 x 2/5 week = 4,400
Salaries expense = 11,000 x 3/5 week = 6,600
Date
General Journal
Debit
Credit
Apr. 30
Legal Expenses
1,500
Legal fees payable
1,500
May 12
Legal fees payable
1,500
Cash
1,500
Apr. 30
Interest expense
1,343
Interest payable
1,343
May 20
Interest payable
1,343
Interest expense
2,687
Cash
4,030
Apr. 30
Salaries expense
4,400
Salaries payable
4,400
May 3
Salaries payable
4,400
Salaries expense
2,200
Cash
6,600
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