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.)
(1) Supplies for office use were purchased during the year for $840, of which $270 remained on hand (unused) at year-end.
(2) Interest of $420 on a note receivable was earned at year-end, although collection of the interest is not due until the following year.
(3) At year-end, salaries and wages payable of $5,300 had not been recorded or paid.
(4) At year-end, one-half of a $3,700 advertising project had been completed for a client, but nothing had been billed or collected.
(5) Redeemed a gift card for $770 of services.

Answer 1

Answer:

supplies expense  570 debit

              supplies                570 credit

----------------------------

interest receivable   420 debit

          interest revenue   420 credit

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wages expense      5,300 debit

       wages payable     5,300 credit

-------------------------

Account receivable   3,700 debit

     Fees earned                   3,700 credit

-----------------------

unearned revenue     770 debit

          fees revenues       770 credit

-------------------------

Explanation:

use of supplies:

purchase - ending supplies

840 - 270 = 570

we decrease the supplies account by this amount and declare the supplies expense

we declare the interest revenue for the period

wages expense for the period and because are unpaid generates a liability

as the job is perform the revenue is earned so we can declare it even if we didn't bill the customer yet.

we have a gift card for 770 and we used for

the gift card was considered unearned revenue at the time being. Now that is redeem we can recognize this revenue.