| a. |
On
April 1, the company retained an attorney for a flat monthly fee of
$3,000. This amount is paid to the attorney on the 12th day of the
following month in which it was earned.
|
| b. |
A
$440,000 note payable requires 8.1% annual interest, or $2,970 to be
paid at the 20th day of each month. The interest was last paid on April
20 and the next payment is due on May 20. As of April 30, $990 of
interest expense has accrued.
|
| c. |
Total
weekly salaries expense for all employees is $14,000. This amount is
paid at the end of the day on Friday of each five-day workweek. April 30
falls on Tuesday of this year, 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 the payment of the accrued expenses.
Explanation:
| b. | |
| Apr. 30 | Interest expense = (8.1% × $440,000 × 10/360) or ($2,970 × 10/30) = $990 |
| May 20 | Interest expense = (8.1% × $440,000 × 20/360) = $1,980 |
| c. | |
| Apr. 30 | Salaries expense = ($14,000 × 2/5 week) = $5,600 |
| May 3 | Salaries expense = ($14,000 × 3/5 week) = $8,400 |
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