Accounting Question – Adjusting entries? solution

Accounting Question – Adjusting entries?

Tags:adjusting entries, december 31, payroll,

2

I have a couple of questions which understanding with adjusting entries, they are:

prepare a required adjusting entries for Dec 31.

1) a weekly (5-day) payroll of Company, Inc. amounts to ,000. All employees have been paid during a tighten of commercial operation any Friday. Dec 31 falls upon a Thursday.

2) upon Feb 1, Company Inc. leased a room to an additional association for ,000 for a 2 year period. a association credited lease income upon Feb 1 when a sum volume of ,000 was perceived in cash.

any assistance will be appreciated

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Comments (2)

EJ (Philippines) said on 09-10-2010

Answer:

1.
(Dr) Salaries expense $1600
(Cr) Salaries payable $1600
$2000 *4 days / 5 days

2.
(Dr) Rent revenue $13000
(Cr) Unearned rent revenue $13000
$24000 / 24 months = $1000 / month
Earned = $1000 / month * 11 months = $11000
Unearned = $1000 / month * 13 months = $13000
Since the receipt of $24000 was recorded as rent revenue on February, the adjusting entry would reflect the proper amount of revenue and liability that should be recognized at year – end.

G said on 09-10-2010

Assuming the fiscal year end for this company is 31 December, move 80% of the payroll cost ($1600) to the prior year, as the associated work was performed in that period.

#2 is worded a little vaguely. If the lease started in year 1 and this is dealing with the year end between year 1 and year 2, then recognize 11/24ths ($11,000) of the revenue in year 1 and defer the rest to year 2 (there will be another deferal for $1,000 at the end of year 2).