Record the journal entries to show each transaction/adjustment. 1. Wages of $2,7

Question

Record the journal entries to show each transaction/adjustment.

1.

Wages of $2,750 accrued at the end of the prior fiscal period were paid this fiscal period.

2.

Real estate taxes of $7,350 applicable to the current period have not been accrued.

3.

Interest on bonds payable has not been accrued for the current month. The company has outstanding $870,000 of 7.5% bonds.

4.

The premium related to the bonds in part c has not been amortized for the current month. The current-month amortization is $145.

5.

Based on past experience with its warranty program, the estimated warranty expense for the current period should be 0.2% of sales of $1,261,500.

6.

Analysis of the company’s income taxes indicates that taxes currently payable are $191,400 and that the deferred tax liability should be increased by $70,470.

Explanation / Answer

JOURNAL ENTRIES

1. ACCRUED WAGES A/C DR. $2750

TO CASH A/C $2750

(BEING PRIOR YEARS WAGES PAID)

2. REAL ESTATE TAXES A/C DR. $7350

TO REAL ESTATE TAXES PAYABLE A/C $7350

(BEING REAL ESTATE TAXES RECOGNISED BUT NOT DUE)

3. INTEREST EXPENSE A/C DR. $65250

TO ACCRUED INTEREST A/C $65250

(BEING INTEREST EXPENSE RECOGNISED BUT NOT ACCRUED)

4. PREMIUM AMORTIZATION A/C DR. $145

TO INTEREST EXPENSE A/C $145

(BEING PREMIUM AMOTIZED AGAINST CURRENT MONTH EXPENSE)

5. REVENUE A/C DR. $2523

TO PROVISION FOR WARRANTY EXPENSE A/C $2523

(BEING PROVISION MADE FOR WARRANTY)

6. REVENUE A/C DR. $191400

TO INCOME TAX PAYABLE A/C $120930

TO DEFERRED TAX LIABILITY A/C $70470

(BEING INCOME TAX PAYABLE)

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