Question

Prepare the adjusting journal entries for the following transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) Supplies for office use were purchased during the year for $700, of which $200 remained on hand (unused) at year-end. Interest of $350 on a note receivable was earned at year-end, although collection of the interest is not due until the following year. At year-end, salaries and wages payable of $4,600 had not been recorded or paid. At year-end, one-half of a $3,000 advertising project had been completed for a client, but nothing had been billed or collected. Redeemed a gift card for $700 of services.

Answer 1

Answer:

Adjusting Journal Entries:

Debit Supplies Expense $500

Credit Supplies $500

To record supplies used during the year.

Debit Interests on Note Receivable $350

Credit Interest on Note $350

To record interest earned, but not received.

Debit Salaries & Wages Expense $4,600

Credit Salaries & Wages Payable $4,600

To record accrued salaries and wages.

Debit Account Receivable (Advertising Project) $1,500

Credit Service Revenue (Advertising Project) $1,500

To record one-half of advertising project completed.

Debit Cash Account $700

Credit Gift Card $700

To record redemption of a gift card of services.

Explanation:

Adjusting entries are made at the end of an accounting period to record accrued expenses and revenue, depreciation charge, deferred expenses and revenue.  These adjustments bring the accounts to agree with the accrual concept which insists that transactions which do not impact cash flows must be recognized in the period they occur.