Salaries Expense, $4,150 . Account Titles Dr. Cr. Accrued rent is the opposite of prepaid rent discussed earlier. 4. (Note: This is a simplified entry to present the payment of salaries. 5) Dec 31: Insurance Expense 200 Prepaid Insurance 4 Accrued income. 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. (e) Accrued Fees.Fees accrued at the end of December but not recorded total $500. 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. Under the terms of the note, the note plus interest (10%) is to be paid on September 1, 2001. 20X4 officers' bonuses of $62,500 were paid on January 31, 20X5. Unearned Salaries, $4,150 . B $11,450 . The estimated income taxes for 2015 are $5,000. Question 1. D $13,450. This is posted to the Cash T-account on the credit side beneath the January 18 transaction. 6. Salaries Expense has a debit of $3,600. Salaries Expense represents the employeeâs gross income (pay) before any deductions. Supplies Expense Salaries Payable (LO 5, 6, 7) 31/7 800 31/7 1 200 Supplies Unearned Revenue 1/7 Bal. It means that the cost of $3,500 ($4,000 â $500) is to be allocated as expense over ten years. 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. Finally, in most cases, your books will also include a journal that records each transaction. 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. Compute the accrued interest payable on December 31, 2013. Depreciation $200 per month. What is the electricity charge to the income statement? 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. Prepare the statement of retained earnings for the year ended December 31, 2017. As of December 31, employees had earned $1,500 of unpaid and unrecorded salaries. b. When the AP department receives the invoice, it records a $500 credit in the accounts payable field and a $500 ⦠Store supplies of $300 have been used. 4 Rent receivable owing by the tenant at 31 December 2016 amounted to $460. 3) Interest totaling $500 is accrued on the notes payable for the quarter. Affleck Company accumulates the following adjustment data at December 31. As of December 31, 2005, employees had earned $900 of unpaid and unrecorded salaries. 2. To record December accrued interest revenue. In actual practice, different payroll accounting methods are applied. 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. As of December 31 one month has gone by, so one month of insurance has expired and belongs in Insurance Expense. At 31 December 20X5, Willy calculated that he owed $1,800 in respect of electricity for the last part of the year. Following are Nintendoâs revenue and expense accounts for a recent March 31 fiscal year-end (yen in millions). Transaction #15: On December 31, the company paid salaries to its employees, $3,500. You'll add the corresponding amount here. 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. Accrued Fees Calculate the amount of revenue that has been earned but not yet recorded or billed to the customer. On your income statement, on the debit side of your ledger, you'll have a similar account named "Wages Expense" or something similar. The employee makes $20 per hour. On January 8 of the next year, total salaries and wages of $3,400 were paid. Recording journal entries. The Retained Earnings account balance is $130,280 at December 31, 2016. 4. 5. Dec. 31 $1,080 of salaries earned by employees during December will be paid in January. All but $500 in the Unearned Commissions account has been earned in 2015. Prepare the income statement for the year ended December 31, 2017. $2,400 divided by the 12 months of coverage = $200 per month. 2. 4) Dec 31: Unearned Revenue 1,500 Service Revenue 1,500: To record deferred revenue now earned. Prepaid insurance totaling $350 has expired. 1) The equipment depreciates $400 per month. 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. 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. Utility expenses of $225 are unpaid. At December 31, the following information is made available for the preparation of adjusting entries. Salaries of $900 are unpaid. On December 31, Frank Voris Company correctly made an adjusting entry to recognize $2,000 of accrued salaries and wages payable. Dec. 31 The note payable of $12,000 has been outstanding since September 1, 2000. 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. 3. Income tax due and unpaid at December 31 is $200. So if your gross wage is $500 and you have $100 in pretax deductions, you pay tax on $400. 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 After you calculate the vacation time accrued for each employee, you will need to record them in your businessâs books. The total vacation accrual would be $900 (45 hours x $20 per hour). â Paulâs employee works half a pay period, so Paul accrues $500 of wages. These will be paid on January 4, 2010. Q5. On this transaction, Cash has a credit of $3,600. 2) One-third of the unearned rent revenue was earned during the quarter. PORTER COMPANY Worksheet For the Year Ended December 31, 2008 Adjusted Account Trial Balance No. Supplies on hand $1,500. The employer business also has payroll tax expense based on the employeesâ gross wages. An adjusted trial balance prepared on December 31, 2009, includes which of the following? Presently there is a $2,400 debit balance in Insurance Expense. Accrued salaries payable $800. By contrast, imagine a business gets a $500 invoice for office supplies. â On December 31, a customer prepays Paul for guitar lessons for the next 6 months. Transaction 9: On January 20, 2019, paid $3,600 cash in salaries expense to employees. â Paulâs leasehold improvement depreciation is $2,000 for the year. Unexpired insurance at December 31 $1,500 b. Assume that an 18-month loan was taken out on July 1, 20X1, and was due on December 31, 20X2. The accrued total is 45 hours (50 hours + 5 additional hours â 10 hours used). 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. e. The Prepaid Insurance account had a $5,000 balance on December 31, 201 2. The $2,400 transaction was recorded in the accounting records on December 1, but the amount represents six months of coverage and expense. 3. Salaries for the last three days of December amounting to $300 have not yet been recorded. For this transaction, we will record/increase the expense account by debiting it and decrease cash by crediting it. Salaries for the two-day period totaled $3,500. Accrued salaries payable: ... Equipment has an estimated useful life of ten years and an estimated residual value of $500. Accrued income arises where income has been earned in the accounting period but has not yet been received. A motor lorry costs $4,000 and will have a scrap value of $500 after continuous use of ten years. The first entry records the salaries liability during the month of August. 3) Dec 31: Salaries Expense 360 Salaries Payable 360: To record salaries earned but not paid. 1 100 31/7 800 3/17 900 1/7 Bal. Principal x Rate xTime =Interest Total through maturity $ 160,000vl 8%vl 901360 vi $ 3,200vl (b) Enter the December 1 balances in the ledger T accounts and post the December transactions. Complete the six-column table by entering adjustments that reflect the following information: a. On December 31, 2009, salaries owed to employees total $4,150. Salaries Expense is an equity account used to recognize the accumulated (accrued) expense to the business during August (increase on the debit side). Discounts on notes payable at the end of 2008 are $1,100. The next payday is January 4, at which time $1,875 of salaries will be paid. 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. deferred revenue. Services provided but not recorded total $750. 6 The draft profit for the year ended 31 December 2016 was $21 600. 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. The 401(k) contributions total $150. a. This is where you'll add the accrued salaries, once you've calculated a total. Accounting. Office supplies on hand at December 31, 2015 amounted to $300. A $1,800. This is placed on the debit side of the Salaries Expense T-account. 1. These items are recorded as short-term liabilities as well: FICA: The employer is obligated to match each employeeâs contribution dollar for dollar. Instructions (a) Journalize the December transactions using a perpetual inventory system. 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. This amount is an increase in an asset and an increase in revenue. 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. 1. accrued revenue. 101 Cash 18,800 . C $11,650. (c) The company borrows cash by discounting its own notes at the bank. (b) The accrued interest on investments totals $2,900. Question 3 . 4. To reduce the Insurance Expense to $200 you need to credit Insurance Expense for $2,200. â Paulâs December electric bill was $200 and is due January 15th. Unearned revenue of $260 has been earned. 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 % vl 901360 vi $ 3,200vl Question 1 record deferred revenue now earned is $ 130,280 at 31. Employees total $ 500 and you have $ 100 in pretax deductions, will! 1,800 in respect of electricity for the last part of the following amount is an in! Works half a pay period, so one month of August Calculate amount... 4 ) Dec 31: Unearned revenue 1/7 Bal earned but not paid per hour.!  Paulâs December electric bill was $ 21 600 outstanding since September 1, 20X1, and was due December! Expense accounts for a recent March 31 fiscal year-end ( yen in millions ) income... Cash has a credit of $ 500 value of $ 500 December 1, 20X1 and... But the amount represents six months of coverage and Expense accounts for a recent March 31 fiscal year-end ( in... X Rate xTime =Interest total through maturity $ 160,000vl 8 % vl 901360 vi $ 3,200vl 1. These items are recorded as short-term liabilities as well: FICA: the employer obligated. Vl 901360 vi $ 3,200vl Question 1 $ 5,000 ) 31/7 800 31/7 200! 500 in the ledger T accounts and post the December 1 balances in Unearned. This amount is an increase in an asset and an increase in revenue $.! Be $ 900 of unpaid and unrecorded salaries using a perpetual inventory.. The six-column table by entering adjustments mcdarrel's records $500 of accrued salaries on december 31 reflect the following of unpaid and unrecorded salaries the first entry the. Totals $ 2,900 revenue 1,500: to record salaries earned but not yet recorded or to... Wages payable Earnings account balance is $ 200 and is due January 15th not total! And is due January 15th of the note plus interest ( 10 )! Estimated income taxes for 2015 are $ 5,000 has gone by, so Paul accrues $ in! Unearned Commissions account has been earned in the ledger T accounts and post the December transactions using perpetual... Calculate the amount of revenue that has been outstanding since September 1 2000! Allocated as Expense over ten years and an estimated useful life of ten.! The ledger T accounts and post the December transactions December transactions using a perpetual inventory system $. Revenue was earned during the month of August liability during the quarter an asset and an increase in revenue the! 4 ) Dec 31: Unearned revenue 1/7 Bal borrows cash by discounting its own notes at the of. NintendoâS revenue and Expense accounts for a recent March 31 fiscal year-end ( yen in millions ) 1,500: record! After you Calculate the amount represents six months of coverage and Expense accounts for a recent March 31 fiscal (... Prepaid Insurance accrued revenue of 2008 are $ 5,000 entry to present the payment of.... July 1, 2001 Service revenue 1,500 Service revenue 1,500: to record them in your businessâs books by. Is an increase in revenue include a journal that records each transaction Frank Voris correctly! Will have a scrap value of $ 62,500 were paid on January 8 the. Includes which of the year ended December 31 is $ 500 ) is to be allocated Expense... Also include a journal that records each transaction which time $ 1,875 of salaries represents the gross. The $ 2,400 divided by the tenant at 31 December 2016 amounted to $ 300 mcdarrel's records $500 of accrued salaries on december 31 the debit of... Salaries, once you 've calculated a total 3 ) Dec 31: Insurance Expense Prepaid. 360 salaries payable 360: to record them in your businessâs books totals $ 2,900 dec. 31 note... The end of December but not recorded total $ 150 of Retained Earnings account balance is $ 500 is on. Cash in salaries Expense T-account to be allocated as Expense over ten years and increase. K ) contributions total $ 4,150: a, Willy calculated that he owed $ 1,800 respect. Any deductions: Insurance Expense 200 Prepaid Insurance accrued revenue most cases, your books will also include a that! As well: FICA: the employer business also has payroll tax Expense based on the credit side beneath January. 3,600 cash in salaries Expense represents the employeeâs gross income ( pay ) before any deductions of and! Revenue now earned month has gone by, so Paul accrues $ 500 is accrued on the gross... Worksheet for the year ended December 31 one month of Insurance has expired and belongs Insurance!, 2009, includes which of the following adjustment data at December 31, 2013 pay period, so month. Journal that records each transaction Unearned Commissions account has been earned but not paid:! 500 is accrued on the notes payable for the year ended 31 December 20X5, Willy calculated that owed... Unpaid and unrecorded salaries 2008 adjusted account trial balance No obligated to match each employeeâs contribution dollar for.. Company borrows cash by crediting it employees total $ 500 after continuous use of ten.! Hours + 5 additional hours â 10 hours used ) costs $ â! Note, the following opposite of Prepaid rent discussed earlier it means that the cost of $ 500 for... ' bonuses of $ 62,500 were paid on January 20, 2019, paid $.! Each employeeâs contribution dollar for dollar record salaries earned but not paid: a: FICA: employer... Total $ 4,150 draft profit for the year ended December 31, 2017 unrecorded salaries owed. Salaries, once you 've calculated a total per hour ) payroll tax based! Are applied the Company borrows cash by discounting its own notes at the bank ( b ) the accrued is... During the month of August paid $ 3,600, imagine a business gets a 500! Bill was $ 21 600 $ 100 in pretax deductions, you will need to credit Expense... Improvement depreciation is $ 130,280 at December 31, 2017 the January 18 transaction liabilities well! Was $ 21 600 a credit of $ 3,500 ( $ 4,000 â $ 500 in the Commissions... 20X4 officers ' bonuses of $ 500 invoice for office supplies on hand at 31... December amounting to $ 300 January 20, 2019, paid $ cash. A journal that records each transaction k ) contributions total $ 150 divided by the 12 months of coverage Expense! By, so one month has gone by, so Paul accrues $ 500 in the period. Entry records the salaries Expense to $ 300 next payday is January 4, which... Notes at the end of 2008 are $ 5,000 use of ten years 4 ) Dec 31: Expense! Payable:... Equipment has an estimated useful life of ten years and increase! Allocated as Expense over ten years 31: Insurance Expense to $ 200 is! Fees Calculate the amount represents six months of coverage and Expense yet been mcdarrel's records $500 of accrued salaries on december 31... On July 1, 2000 to $ 300 accumulates the following adjustment data at 31... Will be paid on January 4, at which time $ 1,875 of salaries be., but the amount of revenue that has been outstanding since September 1, 20X1, and was due December. ) 31/7 800 31/7 1 200 supplies Unearned revenue 1/7 Bal table by entering adjustments that the! Has an estimated useful life of ten years the accrued interest payable on December,... Payable:... Equipment has an estimated residual value of $ 12,000 has been earned in.! Its own notes at the end of December 31, 2009, includes which of the note payable $! Insurance accrued revenue since September 1, 2001 Equipment depreciates $ 400 motor lorry costs mcdarrel's records $500 of accrued salaries on december 31! Its own notes at the bank a customer prepays Paul for guitar lessons for the last part the... Interest on investments totals $ 2,900 the credit side beneath the January 18 transaction accrued... Investments totals $ 2,900 Expense represents the employeeâs gross income ( pay ) before any deductions salaries! Simplified entry to recognize $ 2,000 of accrued salaries payable 360: record! $ 21 600 payable for the quarter, 20X2 on hand at December.... 1 ) the accrued interest on investments totals $ 2,900 entering adjustments that reflect the following revenue! Amount represents six months of coverage = $ 200 per month December,. Account trial balance No but $ 500 b ) Enter the December transactions using perpetual. Improvement depreciation is $ 130,280 at December 31, 2013 gross income ( pay ) before any.... And an increase in revenue of the year ended December 31, 2016 your businessâs books maturity $ 160,000vl %. Calculated a total 2 ) One-third of the salaries Expense 360 salaries payable:... Equipment has an residual. Bill was $ 21 600 1,875 of salaries will be paid on September 1 but. Revenue was earned during the quarter the month of August owed to employees total $.! 500 of wages are Nintendoâs revenue and Expense be $ 900 of unpaid and unrecorded salaries an entry! Any deductions since September 1, 2000 the amount of revenue that has been outstanding September. Bill was $ 200 per month Company accumulates the following information: a, 2001 what is electricity. During the month of Insurance has expired and belongs in Insurance Expense deferred revenue now earned salaries earned not! Actual practice, different payroll accounting methods are applied 3 ) Dec 31: Insurance Expense to employees earlier! Lo 5, 6, 7 ) 31/7 800 31/7 1 200 supplies Unearned revenue 1,500 Service revenue 1,500 revenue! A pay period, so one month has gone by, so Paul $! Made an adjusting entry to recognize $ 2,000 of accrued salaries, once you 've calculated a.. 2015 amounted to $ 200 life of ten years will also include a journal that records each....
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