On April 1, the company hired an attorney for a flat monthly fee of $3,500. Payment for April legal services was made by the company on May 12. As of April 30, $3,000 of interest expense has accrued on a note payable. The full interest payment of $9,000 on the note is due on May 20. Total weekly salaries expense for all employees is $10,000. This amount is paid at the end of the day on Friday of each five-day work week. April 30 falls on a Tuesday, 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 payment of the accrued expenses.

Question

Bradyn Mckenzie

Business

27 May, 09:14

On April 1, the company hired an attorney for a flat monthly fee of $3,500. Payment for April legal services was made by the company on May 12. As of April 30, $3,000 of interest expense has accrued on a note payable. The full interest payment of $9,000 on the note is due on May 20. Total weekly salaries expense for all employees is $10,000. This amount is paid at the end of the day on Friday of each five-day work week. April 30 falls on a Tuesday, 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 payment of the accrued expenses.

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Royce Blake · Answer 1

Adjusting entries:

April 30, legal fees

Dr Legal fees expense 3,500

Cr Legal fees payable 3,500

April 30, accrued interest

Dr Interest expense 3,000

Cr Interest payable 3,000

April 30, wages expense

Dr Wages expense 4,000

Cr Wages payable 4,000

Subsequent entries:

May 12, legal fees

Dr Legal fees payable 3,500

Cr Cash 3,500

May 20, paid interest

Dr Interest expense 6,000

Dr Interest payable 3,000

Cr Cash 9,000

May 3, wages expense

Dr Wages expense 4,000

Dr Wages payable 6,000

Cr Cash 10,000