Question

Exercise (2):

Answer 1

Answer:

 

                    Amount in $  

                                              Dr.          Cr.

Salaries Expense   1,300  

Salaries Payable       1,300

   

Salaries to be paid in august    

   

Bank             20,000  

Long term loan       20,000

   

Loan received from bank on a 10 year note    

   

Interest Expense   200  

Interest payable      200

   

Expense on loan for 10 years ( 20,000 *.12*1/12)    

   

Revenue           2,400  

Receivable             2,400

   

Unrecorded revenue    

Explanation:

1. Salaries are payable in august so a payable will be recorded for the amount. and  an expense will be booked for the month.

2. Since this loan is for a period of more than 12 months so it will be treated as long term and interest on it will be calculated as mentioned above.

3. Unrecorded revenue will be recorded at mentioned above.