Question

Prepare the adjusting journal entries for the following transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)Supplies for office use were purchased during the year for $800, of which $250 remained on hand (unused) at year-end. Interest of $400 on a note receivable was earned at year-end, although collection of the interest is not due until the following year. At year-end, salaries and wages payable of $5,100 had not been recorded or paid. At year-end, one-half of a $3,500 advertising project had been completed for a client, but nothing had been billed or collected. Redeemed a gift card for $750 of services.

Answer 1

Answer:

The Adjusting entries will be as followed;

Explanation:

1)Supplies Expense                Dr.800

   Cash/Bank                                     Cr.800

No entry for  supplies in hand as they are not inventory

2) Interest receivable       Dr.400

   Interest Income                Cr. 400

3)  Salaries Expense        Dr.5,100

    Salaries Payable              Cr. 5,100  

4) Advertising Income Receivable (3500/2)      Dr.1,750  

   Advertising Income                                         Cr. 1,750

5)  Gift Received           Dr.750

     Gift Income              Cr. 750

In our above scenario, it is assumed that company follows accrual basis of accounting. Therefore all entries made reflect the concept of accrual accounting rather than cash accounting