Answer:
1. a. Debit Salaries $5,320
Credit Accrued Salaries $5,320
Being accrued salaries for December 31
b. Debit Utilities $1,970
Credit Accrued Utilities $1,970
Being accrued Utilities for December 31
c. Debit Interest $925
Credit Accrued Interest $925
Being accrued Interest note payable for December 31
2. Income statement will be overstated by the sum of $8,215
Explanation:
The are the adjusting entries needed at December 31.
1. a. Debit Salaries $5,320
Credit Accrued Salaries $5,320
Being accrued salaries for December 31
b. Debit Utilities $1,970
Credit Accrued Utilities $1,970
Being accrued Utilities for December 31
c. Debit Interest $925
Credit Accrued Interest $925
Being accrued Interest note payable for December 31
2. The effect on the financial statements if these adjusting entries are not made is that the income statement will be overstated by the sum of $8,215 , Below is the computation:
Salaries $5,320
Utilities $1,970
Interest <u> $925 </u>
Total expenses <u> $8,215 </u>
