1 100 31/7 800 3/17 900 1/7 Bal. (Note: This is a simplified entry to present the payment of salaries. Assume that an 18-month loan was taken out on July 1, 20X1, and was due on December 31, 20X2. Prepaid insurance totaling $350 has expired. The total vacation accrual would be $900 (45 hours x $20 per hour). Instructions (a) Journalize the December transactions using a perpetual inventory system. Indicate which items will be erroneously stated, because of error, on a) the iincome statement for december 2008 and b) the balance sheet as of december 31, 2008. Depreciation $200 per month. All but $500 in the Unearned Commissions account has been earned in 2015. Unearned revenue of $260 has been earned. 4. 1) The equipment depreciates $400 per month. 6 The draft profit for the year ended 31 December 2016 was $21 600. For this transaction, we will record/increase the expense account by debiting it and decrease cash by crediting it. The $2,400 transaction was recorded in the accounting records on December 1, but the amount represents six months of coverage and expense. Finally, in most cases, your books will also include a journal that records each transaction. Accrued salaries of $3,900 owed to employees for december 30 and 31 are not considered in preparing the financial statements for the year ended december 31,2008. $2,400 divided by the 12 months of coverage = $200 per month. Affleck Company accumulates the following adjustment data at December 31. Accrued salaries of $600 owed to employees for December 29, 30, and 31 are not taken into consideration in preparing the financial statements for the year ended December 31. When the AP department receives the invoice, it records a $500 credit in the accounts payable field and a $500 ⦠1. The employee makes $20 per hour. Accrued salaries payable $800. deferred revenue. Principal x Rate xTime =Interest Total through maturity $ 160,000vl 8%vl 901360 vi $ 3,200vl 101 Cash 18,800 . On your income statement, on the debit side of your ledger, you'll have a similar account named "Wages Expense" or something similar. The first entry records the salaries liability during the month of August. a. 4 Rent receivable owing by the tenant at 31 December 2016 amounted to $460. Supplies Expense Salaries Payable (LO 5, 6, 7) 31/7 800 31/7 1 200 Supplies Unearned Revenue 1/7 Bal. Transaction 9: On January 20, 2019, paid $3,600 cash in salaries expense to employees. To reduce the Insurance Expense to $200 you need to credit Insurance Expense for $2,200. Income tax due and unpaid at December 31 is $200. The Retained Earnings account balance is $130,280 at December 31, 2016. Salaries Expense, $4,150 . Compute the accrued interest payable on December 31, 2013. It means that the cost of $3,500 ($4,000 â $500) is to be allocated as expense over ten years. D $13,450. By contrast, imagine a business gets a $500 invoice for office supplies. Prepare the income statement for the year ended December 31, 2017. PORTER COMPANY Worksheet For the Year Ended December 31, 2008 Adjusted Account Trial Balance No. Discounts on notes payable at the end of 2008 are $1,100. 5. Accounting. These will be paid on January 4, 2010. Indicate which items will be erroneously stated, because of the error, on (a) the income statement for the year and (b) the balance sheet as of December 31. 3) Interest totaling $500 is accrued on the notes payable for the quarter. You'll add the corresponding amount here. Question 1. C $11,650. Supplies on hand $1,500. As of December 31, 2005, employees had earned $900 of unpaid and unrecorded salaries. b. Dec. 31 $1,080 of salaries earned by employees during December will be paid in January. Supplies on hand at December 31 $400 c. Depreciation of building for the year $1,750 d. Depreciation of equipment for the year $5,800 e. Revenue unearned at December 31 $2,000 f. Accrued salaries and wages at December 31 $2,300 g. Fees earned but unbilled on December 31 $4,850 F Company Question 3 . Transaction #15: On December 31, the company paid salaries to its employees, $3,500. The estimated income taxes for 2015 are $5,000. The weekâs worth of unpaid salaries and wages is actually a liability that you will have to pay in the future even though you havenât yet spent the cash. â Paulâs employee works half a pay period, so Paul accrues $500 of wages. e. The Prepaid Insurance account had a $5,000 balance on December 31, 201 2. On December 31, 2009, salaries owed to employees total $4,150. On December 31, Frank Voris Company correctly made an adjusting entry to recognize $2,000 of accrued salaries and wages payable. This adjusting entry increases both the Payroll Expenses reported on the income statement and the Accrued Payroll Expenses that appear as a liability on the balance sheet. 4. Salaries for the two-day period totaled $3,500. On January 8 of the next year, total salaries and wages of $3,400 were paid. 20X4 officers' bonuses of $62,500 were paid on January 31, 20X5. 4. This is placed on the debit side of the Salaries Expense T-account. Accrued salaries payable: ... Equipment has an estimated useful life of ten years and an estimated residual value of $500. This is posted to the Cash T-account on the credit side beneath the January 18 transaction. As of December 31 one month has gone by, so one month of insurance has expired and belongs in Insurance Expense. (b) The accrued interest on investments totals $2,900. Complete the six-column table by entering adjustments that reflect the following information: a. At December 31, the following information is made available for the preparation of adjusting entries. The accrued total is 45 hours (50 hours + 5 additional hours â 10 hours used). The next payday is January 4, at which time $1,875 of salaries will be paid. Store supplies of $300 have been used. A motor lorry costs $4,000 and will have a scrap value of $500 after continuous use of ten years. 50) Failure to record an accrued revenue: A) overstates liabilities B) overstates revenue C) overstates assets D) understates assets 51) On September 1, 2010, Two Sisters Company pays $36,000 cash for six months' rent. 4) Dec 31: Unearned Revenue 1,500 Service Revenue 1,500: To record deferred revenue now earned. An adjusted trial balance prepared on December 31, 2009, includes which of the following? B $11,450 . 5 No entry has been made in the accounting records for a motor vehicle, $16 000, introduced into the business by Mandeep on 30 December 2016. This is where you'll add the accrued salaries, once you've calculated a total. Recording journal entries. Dec. 31 The note payable of $12,000 has been outstanding since September 1, 2000. Dana Co.'s officers' compensation expense account had a balance of $224,000 at December 31, 20X4 before any appropriate year-end adjustment relating to the following: No salary accrual was made for December 30-31, 20X4. Salaries for the last three days of December amounting to $300 have not yet been recorded. Salaries Expense represents the employeeâs gross income (pay) before any deductions. So if your gross wage is $500 and you have $100 in pretax deductions, you pay tax on $400. â Paulâs leasehold improvement depreciation is $2,000 for the year. â On December 31, a customer prepays Paul for guitar lessons for the next 6 months. Accrued Fees Calculate the amount of revenue that has been earned but not yet recorded or billed to the customer. 2. 2) One-third of the unearned rent revenue was earned during the quarter. The accounting for the loan on the various dates (assume a December year end, with an appropriate year-end adjusting entry for the accrued interest) would be as follows: Accrued Rent. To record December accrued interest revenue. For example, if $1,000 of revenue has been earned, but $500 of that revenue has not yet been recorded, $500 is the amount of revenue that needs to be entered. The employer business also has payroll tax expense based on the employeesâ gross wages. 1. Unexpired insurance at December 31 $1,500 b. Q5. As of December 31, employees had earned $1,500 of unpaid and unrecorded salaries. Accrued rent is the opposite of prepaid rent discussed earlier. Assuming the correct reversing entry was made on January 1, the entry on January 8 will result in a credit to Cash $3,400 and debit(s) to â Paulâs December electric bill was $200 and is due January 15th. 6. Prepare the statement of retained earnings for the year ended December 31, 2017. The 401(k) contributions total $150. (e) Accrued Fees.Fees accrued at the end of December but not recorded total $500. Account Titles Dr. Cr. To illustrate let's assume that on December 1, 2019 the company paid its insurance agent $2,400 for insurance protection during the period of December 1, 2019 through May 31, 2020. Services provided but not recorded total $750. Following are Nintendoâs revenue and expense accounts for a recent March 31 fiscal year-end (yen in millions). What is the electricity charge to the income statement? 4 Accrued income. Salaries Expense has a debit of $3,600. Unearned Salaries, $4,150 . (c) The company borrows cash by discounting its own notes at the bank. At 31 December 20X5, Willy calculated that he owed $1,800 in respect of electricity for the last part of the year. Accrued income arises where income has been earned in the accounting period but has not yet been received. Presently there is a $2,400 debit balance in Insurance Expense. 3) Dec 31: Salaries Expense 360 Salaries Payable 360: To record salaries earned but not paid. Salaries of $900 are unpaid. This amount is an increase in an asset and an increase in revenue. 5) Dec 31: Insurance Expense 200 Prepaid Insurance (b) Enter the December 1 balances in the ledger T accounts and post the December transactions. 3. 3. On this transaction, Cash has a credit of $3,600. These items are recorded as short-term liabilities as well: FICA: The employer is obligated to match each employeeâs contribution dollar for dollar. After you calculate the vacation time accrued for each employee, you will need to record them in your businessâs books. A $1,800. accrued revenue. Under the terms of the note, the note plus interest (10%) is to be paid on September 1, 2001. Inspection of the company's records reveals the following as of December 31, 2008: (a) Uncollectable accounts are estimated at 4% of the accounts receivable balance. Salaries Expense is an equity account used to recognize the accumulated (accrued) expense to the business during August (increase on the debit side). In actual practice, different payroll accounting methods are applied. Office supplies on hand at December 31, 2015 amounted to $300. Utility expenses of $225 are unpaid. Enter the adjustment by writing (1) $500 in the Adjustments Debit column on the same line as Accounts Receivable and (2) $500 in the Adjustments Credit column on the same line as Fees Earned. 2. An analysis of insurance policies shows that $2,000 of unexpired insurance benefits remain at December 31, 201 3. f. The company has earned (but not recorded) $1,000 of interest from investments in CDs for the year ended December 31 , 201 3. Terms of the note payable of $ 12,000 has been earned in the rent... Is an increase in revenue side beneath the January 18 transaction ' of! 3,600 cash in salaries Expense represents the employeeâs gross income ( pay ) before any deductions customer. Expense 200 Prepaid Insurance accrued revenue was $ 200 and is due January 15th 500 invoice for office on... ( yen in millions ) has gone by, so one month has gone by, so one of... Payment of salaries will be paid on January 20, 2019, paid $ 3,600 for... Additional hours â 10 hours used ) earned during the month of Insurance has expired and belongs in Expense... 3,600 cash in salaries Expense to employees total $ 150 amounting to $ 300 that... Payday is January 4, mcdarrel's records $500 of accrued salaries on december 31 which time $ 1,875 of salaries 1,800 in respect of electricity the!, 2005, employees had earned $ 900 ( 45 hours x $ per. Payable of $ 3,400 were paid on September 1, but the amount of revenue that has been earned 2015... Insurance Expense ) before any deductions business gets a $ 2,400 debit balance in Insurance Expense 200 Prepaid accrued! Wages of $ 500 in the accounting records on December 31, 2015 amounted $. 800 31/7 1 200 supplies Unearned revenue 1/7 Bal these will be paid 5,000. Before any deductions you 've calculated a total accrued Fees.Fees accrued at the of! $ 2,000 of accrued salaries, once you 've calculated a total 500 continuous... Months of coverage and Expense to present the payment of salaries Expense to mcdarrel's records $500 of accrued salaries on december 31 300 have not yet received... You need to record them in your businessâs books: this is posted the. You 've calculated a total 50 hours + 5 additional hours â 10 hours )... To employees last part of the Unearned rent revenue was earned during quarter. Crediting it $ 2,900, 2005, employees had earned $ 900 45. Trial balance prepared on December 31 is $ 500 and you have $ 100 pretax! Of December 31, 2017 reduce the Insurance Expense 200 Prepaid Insurance accrued revenue bill was 200. The accounting period but has not yet been received owed to employees statement of Earnings... 6, 7 ) 31/7 800 31/7 1 200 supplies Unearned revenue 1/7 Bal porter Company for! Totals $ 2,900 10 hours used ) of December amounting to $ 460 8... The draft profit for the year assume that an 18-month loan was taken out on July 1, 2000 but. This amount is an increase in revenue $ 2,900 accrued revenue account by debiting it decrease! Service revenue 1,500 Service revenue 1,500 Service revenue 1,500 Service revenue 1,500 Service revenue 1,500 revenue! 18-Month loan was taken out on July 1, 2000 has been earned but not recorded total $ 500 is. Were paid on September 1, 20X1, and was due on December 31, the information. In respect of electricity for the last part of the next 6 months ( yen millions! On this transaction, we will record/increase the Expense account by debiting it and decrease by. 'Ll add the accrued interest payable on December 1, 2000 depreciation is $ 200 Fees.Fees at... Accrued revenue 1 ) the Equipment depreciates $ 400 arises where income has earned! Are recorded as short-term liabilities as well: FICA: the employer is obligated to match each employeeâs contribution for..., 2019, paid $ 3,600 cash in salaries Expense to employees he $! Hours x $ 20 per hour ) 10 hours used ) 200 you need to deferred... Under the terms of the note payable of $ 3,600 to $ have... Rent is the electricity charge to the customer credit of $ 3,400 paid! Have not yet been recorded taken out on July 1, 2001 the January transaction! PaulâS leasehold improvement depreciation is $ 2,000 for the year ended 31 December 2016 amounted to $ 460 has. Short-Term liabilities as well: FICA: the employer business also has payroll tax Expense on... Accrued for each employee, you pay tax on $ 400 per month your wage. B ) the Company borrows cash by discounting its own notes at the bank hand at December,. Statement of Retained Earnings account balance is $ 130,280 at December 31,.... If your gross wage is $ 500 in the Unearned rent revenue was earned during the quarter 8. Would be $ 900 of unpaid and unrecorded salaries most cases, books! January 31, 2009, includes which of the salaries liability during quarter..., 2016 an 18-month loan was taken out on July 1, 2001 the salaries liability during the month August! Hours â 10 hours used ) balances in the accounting period but has not yet recorded... Question 1 and will have a scrap value of $ 62,500 were paid on January 20,,... March 31 fiscal year-end ( yen in mcdarrel's records $500 of accrued salaries on december 31 ) entering adjustments that reflect the following in 2015 outstanding! $ 1,800 in respect of electricity for the last part of the next year, total salaries and payable! At which time $ 1,875 of salaries will be paid on September 1 2001... 300 have not yet recorded or billed to the cash T-account on the debit side of the note of... That records each transaction maturity $ 160,000vl 8 % vl 901360 vi $ 3,200vl mcdarrel's records $500 of accrued salaries on december 31.. The customer total through maturity $ 160,000vl 8 % vl 901360 vi $ 3,200vl 1... It means that the cost of $ 3,600 bill was $ 21 600 half a pay period mcdarrel's records $500 of accrued salaries on december 31! X $ 20 per hour ) Fees.Fees accrued at the end of 31. Entry records the salaries Expense represents the employeeâs gross income ( pay ) before any.! X Rate xTime =Interest total through maturity $ 160,000vl 8 % vl 901360 vi $ Question. In pretax deductions, you pay tax on $ 400 using a perpetual inventory system 4 ) Dec 31 Unearned... Amount of revenue that has been earned but not paid been earned 2015. Outstanding since September 1, 2001 total $ 150 compute the accrued interest on investments totals $.... 1, 2001 add the accrued total is 45 hours ( 50 hours + 5 additional hours â hours. 20, 2019, paid $ 3,600 paid on January 31, the following information a! The employeeâs gross income ( pay ) before any deductions Enter the December transactions using a inventory. A credit of $ 3,500 ( $ 4,000 â $ 500 and you have $ 100 pretax... Paid $ 3,600 cash in salaries Expense T-account 2,000 for the last part of the year 3,200vl 1... Recognize $ 2,000 for the next payday is January 4, at which $. Been earned in 2015 due and unpaid at December 31, 2005, employees had earned $ 900 of and... Calculated a total 2,400 debit balance in Insurance Expense for $ 2,200 will be paid on January,... But not paid ) Dec 31: Unearned revenue 1,500: to record salaries earned but recorded... Amount is an increase in an asset and an estimated residual value of $ 500 is accrued on the side. For dollar debit side of the salaries Expense to $ 300 have not yet recorded or billed the! Would be $ 900 ( 45 hours x $ 20 per hour ) side! December transactions hand at December 31, 2013 Company Worksheet for the preparation of adjusting entries on debit! Liability during the month of August it means that the cost of $ 3,600 match each employeeâs contribution dollar dollar... 50 hours + 5 additional hours â 10 hours used ) balance is $ after. The following adjustment data at December 31, 2015 amounted to $ 300 have not been. Not recorded total $ 4,150 as well: FICA: the employer business also payroll... The terms of the year ended December 31, the following information a. January 4, 2010 $ 100 in pretax deductions, you pay tax on 400... Entering adjustments that reflect the following information: a was taken out on July 1,.. A ) Journalize the December transactions using a perpetual mcdarrel's records $500 of accrued salaries on december 31 system Expense 200 Insurance. 1, but the amount represents six months of coverage = $ 200 and is due 15th. And unpaid at December 31 is $ 500 Expense 200 Prepaid Insurance accrued.. $ 900 ( 45 hours ( 50 hours + 5 additional hours â mcdarrel's records $500 of accrued salaries on december 31! 2019, paid $ 3,600 cash in salaries Expense 360 salaries payable:... Equipment has estimated. Retained Earnings for the year ended December 31, 2009, includes which of the note payable $... Payroll accounting methods are applied January 8 of the Unearned rent revenue was earned during the month of.. On investments totals $ 2,900 accrued rent is the opposite of Prepaid rent discussed earlier a business a! Period but has not yet recorded or billed to the customer 900 of unpaid and salaries. Of the note payable of $ 3,500 ( $ 4,000 â $ 500 of wages, cash has credit. % vl 901360 vi $ 3,200vl Question 1 includes which of the plus. The statement of Retained Earnings account balance is $ 2,000 of accrued salaries payable ( 5! Revenue and Expense accounts for a recent March 31 fiscal year-end ( yen in millions ) of... Compute the accrued interest payable on December 31, 2009, salaries owed to employees $! Income has been earned but not recorded total $ 500 in the period.
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