Answer:
1. Debit Interest receivable $410
Credit Interest income $410
2. Debit Property tax expense $800
Credit Tax liability $800
3. Debit Unearned revenue $3,300
Credit Service revenue $3,300
4. Debit Insurance expense $300
Credit Prepaid Insurance $300
5. Debit Salaries expense $650
Credit Accrued salaries $650
Explanation:
1. Unrecorded interest accrued on savings bond is the amount of interest earned but yet to be paid. The entries to adjust for this are;
Debit Interest receivable $410
Credit Interest income $410
Being entries to recognized interest earned on bond savings.
2. Property taxes incurred but not paid or recorded - This is an expense to the company while the corresponding entry is a liability since it is yet to be paid. The entries to adjust for this are;
Debit Property tax expense $800
Credit Tax liability $800
Being entries to record tax expense incurred on property.
3. Unearned service for which cash has been collected is a liability to the company as there is a present obligation due to the past event of cash collection. when cash was collected, debit cash, credit unearned revenue. When revenue is earned, credit revenue, debit unearned revenue. Going by this, the revenue earned at the end of the year
= $4000 - $700
= $3,300
The entries to adjust for this are;
Debit Unearned revenue $3,300
Credit Service revenue $3,300
Being entries to recognize revenue earned during the year.
4. Prepaid insurance had a $750 debit balance prior to adjustment. By year end, 60 percent was still unexpired. If 60% was unexpired, 40% has expired. This amounts to
= 40% of $750
= $300
The entries to adjust for this are;
Debit Insurance expense $300
Credit Prepaid Insurance $300
Being entries to recognize insurance expense for the period.
5. Salaries incurred by year end but not yet paid or recorded amounted to $650. - When salaries are incurred but unpaid, an expense and a liability should be recorded. The entries to adjust for this are;
Debit Salaries expense $650
Credit Accrued salaries $650
Being entries to recognize insurance expense for the period.
