Adjusting Entries The bookkeeper for Joe’s Hardware Co. records all revenue and expense items in nominal accounts during the period. The following balances, among others, are listed on the trial balance at the end of the fiscal period, December 31, 2013, before accounts have been adjusted: Dr. (Cr.) Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $123,000 Allowance for Bad Debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,700) Interest Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200 Discount on Notes Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300 Prepaid Real Estate and Personal Property Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,600 Salaries and Wages Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,600) Discount on Notes Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,800) Unearned Rent Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,200) Inspection of the company’s records reveals the following as of December 31, 2013: (a) Uncollectible accounts are estimated at 4% of the accounts receivable balance. (b) The accrued interest on investments totals $3,900. (c) The company borrows cash by discounting its own notes at the bank. Discounts on notes payable at the end of 2013 are $1,200. (d) Prepaid real estate and personal property taxes are $1,600, the same as at the end of 2012. (e) Accrued salaries and wages are $8,300. (f) The company accepts notes from customers, giving its customers credit for the face of the note less a charge for interest. At the end of each period, any interest applicable to the succeeding period is reported as a discount. Discounts on notes receivable at the end of 2013 are $1,300. (g) Part of the company’s properties had been sublet on September 15, 2012, at a rental of $2,100 per month. The arrangement was terminated at the end of one year. Instructions: Give the adjusting entries required to bring the books up to date.

Adjusting Entries The bookkeeper for Joe’s Hardware Co. records all revenue and expense items in nominal accounts during the period. The following balances, among others, are listed on the trial balance at the end of the fiscal period, December 31, 2013, before accounts have been adjusted: Dr. (Cr.) Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $123,000 Allowance for Bad Debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,700) Interest Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200 Discount on Notes Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300 Prepaid Real Estate and Personal Property Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,600 Salaries and Wages Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,600) Discount on Notes Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,800) Unearned Rent Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,200) Inspection of the company’s records reveals the following as of December 31, 2013: (a) Uncollectible accounts are estimated at 4% of the accounts receivable balance. (b) The accrued interest on investments totals $3,900. (c) The company borrows cash by discounting its own notes at the bank. Discounts on notes payable at the end of 2013 are $1,200. (d) Prepaid real estate and personal property taxes are $1,600, the same as at the end of 2012. (e) Accrued salaries and wages are $8,300. (f) The company accepts notes from customers, giving its customers credit for the face of the note less a charge for interest. At the end of each period, any interest applicable to the succeeding period is reported as a discount. Discounts on notes receivable at the end of 2013 are $1,300. (g) Part of the company’s properties had been sublet on September 15, 2012, at a rental of $2,100 per month. The arrangement was terminated at the end of one year. Instructions: Give the adjusting entries required to bring the books up to date.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Date	Account title	Debit	Credit
Dec. 31	Bad debt expense ((123,000x 4%)-$2,700)	2,220
	Allowance for bad debts		2,220

Date	Account title	Debit	Credit
Dec. 31	Interest receivable (3,900-3,200)	700
	Interest revenue		700

Date	Account title	Debit	Credit
Dec. 31	Discount on notes payable	900
	Interest expense (1,200-300)		900