Accounting Transactions Analysis and Adjusting Entries Study

School: Fanshawe College - Course: ACCT 1550 - Subject: Accounting

On November 1, 2022, Miller Web Services borrowed $100,000 from Big Bank. The loan plus interest is to be repaid on January 1, 2023. The interest rate on this bank loan is 6%. Prepare all entries associated with the above transaction, assuming Miller prepares monthly adjusting ent JOURNALPage 5 DateAccount Title and ExplanationPRDebitCredit 2022 Nov 1Cash100,000 Bank Loan100,000 To record bank loan received Nov 30Interest Expense500 Interest Payable500 To accrue interest for 1 month on bank loan ($100,000 × 6% × 1/12) Dec 31Interest Expense500 Interest Payable500 To accrue interest for 1 month on bank loan ($100,000 × 6% × 1/12) 2023 Jan 1Bank Loan100,000 Interest Payable1,000 Cash101,000 To record repayment of bank loan plus interestAP-5A LO5-1, 3

tries and pays the loan plus interest on the due date.

Susan Richards opened up a consulting business in late August 2022, called North Star Inc. The following transactions took place in September 2022, her first month of operations. Sep 1Susan signed a one-year lease for her space and prepaid the first and last months' rent. The payment was recorded as $3,000 in the prepaid rent account on that date. Rent is $1,500/month and paid on the last day of each month. Sep 16Susan hired an administrative assistant. The assistant worked 20 hours per week for the last two weeks of September at an hourly rate of $1 Susan intends to pay her on October 1. Sep 24Susan agreed to offer consulting work for a customer in early October. The customer paid $1,000 in advance to secure the contract. Sep 27Susan performed consulting work for a client in the amount of $2,000, which will be paid at a later d Record the adjusting entries Susan must record on September 30, 2022. JOURNALPage 5 DateAccount Title and ExplanationPRDebitCredit 2022 Sep 30Rent Expense1,500 Prepaid Rent1,500 To adjust for one month of rent used Sep 30Salaries Expense600 Salaries Payable600 To accrue salaries owing Sep 30Cash1,000 Unearned Revenue1,000 To record cash received for services at a later date Sep 30Accounts Receivable2,000 Service Revenue2,000 To accrue revenue