Question

Consider the following situations for Shocker:

Answer 1

Answer and Explanation:

The journal entries are shown below:

a. Deferred revenue Dr ($3,750 ÷ 3 months) $1,250

        To Revenue $1,250

(Being the revenue of three month is recorded)

b. Advertising expense Dr ($2,550 × 10 ÷ 30) $850

          To Prepaid advertise $850

(Being the advertising expense is recorded)

c. Salary expense Dr $7,500

          To Outsanding salary $7,500

(Being the salary expense is recorded)

d. Interest expense Dr ($65,000 × 6% × 4 months ÷ 12 months) $1,300

         To Accrued interest $1,300

(being the interest expense is recorded)

The four months is taken from August 31 to December 31