Adjusting Entries-Accrued Expenses #2 Prepare journal entries for the following

Question

Adjusting Entries-Accrued Expenses #2 Prepare journal entries for the following transactions for The Vermont Furniture Company. January 1-Obtained a $300.000 bank loan @5% interest with principal and interest due in one year January 30 - Prepare the adjusting journal entry for the above loan. Question- How much interest expense will have been accrued on the loan by the end of the year? January 30- Owed salaries for the previous week of $45,000 February 2 - Paid the salaries June 30- A fuel truck delivered $15,000 worth of fuel for the factory. The bill has not yet been received July 2- Fuel bill received but not paid. July 7 - Fuel bill paid Sept. 30- CPA firm has not yet sent an invoice for Sept. services amounting to $10,000. Oct. 5- Invoice received from CPA firm but not yet paid. Oct. 10-Paid the CPA invoice in full March 31 - By agreement, legal service fees from the Company's Law firm for March total $40,000. No invoice was sent. April 1 - Invoice for March fees received from the Law firm. April 3- Paid the Law firm invoice for March.

Explanation / Answer

Dr CR 1 Cash 300000 Bank Loan 300000 30 Interest Expense 1250 Interest Payable 1250 (300000*5%/12) Jan-30 Salaries and Wages 45000 Wages Payable 45000 Feb-02 Wages Payable 45000 Cash 45000 Jun-30 Fuel 15000 Account Payable 15000 Jul-02 No entry required Jul-07 Account Payable 10000 Cash 10000 Sep-30 CPA Fess 10000 Account Payable 10000 Oct-05 No entry required Oct-10 Account Payable 10000 Cash 10000 Mar-31 Legal Fees 40000 Account Payable 40000 Apr-01 No entry required Apr-03 Account Payable 40000 Cash 40000

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