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Homework answers / question archive / For each of the following transactions (a) through (a for Catena's Marketing Company, prepare the adjusting entry
For each of the following transactions (a) through (a for Catena's Marketing Company, prepare the adjusting entry. The process includes (1) determining if revenue was earned or an expense was incurred, (2) determining whether cash was received or paid in the past or will be received or paid in the future, and (3) computing the amount of the adjustment. (if no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers to nearest whole dollar value.) a. Estimated electricity usage at $260 for December, to be paid in January of next year. b. On September 1 of the current year, loaned $5,400 to an officer who will repay the loan principal and interest in one year at an annual interest rate of 11 percent. c. Owed wages to 24 employees who worked four days at $260 each per day at the end of the current year. The company will pay employees at the end of the first week of next year.
Journal entry worksheet
| Transaction | Particulars | Debit Amount | Credit Amount |
| a | Electricity Expenses A/c Dr. | $ 260.00 | |
| To Outstanding Electricity Expenses A/c | $ 260.00 | ||
| (As electricity expense is related to the month of December it will be entered in the same month to which it relates on the accrual basis. So Electricity expense account is debited in the month of December. Also it becomes the liability to pay the expense in the next month so Outstanding electricity expense account is credited and it will be debited when the payment is made.) | |||
| b | Accrued Interest A/c Dr. | $ 198.00 | |
| To Interest A/c | $ 198.00 | ||
| (5400*11%*4/12 = $198.00, as the interest so earned is related to the current year it will be booked as income in the current year by credit the interest account. Also the same is not received in the current year so Accrued Interest account is debited as it is an asset for the company. When the amount of interest will be received accrued interest account will be credited and cash account will be debited.) | |||
| c | Wages A/c Dr. | $ 24,960.00 | |
| To Outstanding Wages A/c | $ 24,960.00 | ||
| ($260*4 days*24 employees = $24,960.00. As the wages relates to current year it is booked as an expense in the current year on accrual basis by debiting wages account. Also it becomes liability of the company to pay the same in future so outstanding wages account is crediting for booking the liability. Outstanding wages account will be debited on the date of payment so made in respect of such wages and bank/cash account will be credited.) |
