On April 1, the company hired an attorney for a flat monthly fee of $3,5000. Payment for April legal services was made by the company on May 12.

Question continuation

"2. A $480,000 note payable requires 9.1% annual interest, or $3,640, 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, $1,213 of interest expense has accrued.  

3. Total weekly salaries expense for all employees is $9,000. This amount is paid at the end of the day on Friday of each five-day workweek. April 30 falls on a Tuesday, 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. (Use 360 days a year. Do not round intermediate calculations.)"

Solution:

No  Type          Date       Account                 Debit       Credit  

1   Adjusting  Apr 30       Legal Expenses    $3,500  

                                       Accounts Payable                   $3,500  

                                      (To record legal expenses)

 Subsequent May 12     Accounts Payable  $3,500

                                        Cash                                         $3,500

                                        (To record payment in May)

2  Adjusting   Apr 30      Interest Expense     $1,213

                                        Interest Payable                        $1,213

                                        (To record interest expense accrued)

Subsequent May 20      Interest Expense       $2,427  

                                       ($3,640-$1,213)

                                        Interest Payable        $1,213

                                        Cash                                          $3,640

                                        (To record payment in May)

3  Adjusting   Apr 30      Salaries Expense        $3,600

                                        Salaries Payable                         $3,600

                                         ($9,000/5*2)

                                        (To record salaries expense accrued)  

  Subsequent  May 3      Salaries Expense         $5,400  

                                         ($9,000/5*3)  

                                         Salaries Payable          $3,600  

                                         Cash                                             $9,000

                                          (To record payment in May)

19

step-by-step explanation:

d

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