Question

For each of the following transactions for New Idea Corporation, prepare the adjusting journal entries required on July 31. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) Received a $600 utility bill for electricity usage in July to be paid in August. Owed wages to 10 employees who worked three days at $100 each per day at the end of July. The company will pay employees at the end of the first week of August. On July 1, loaned money to an employee who agreed to repay the loan in one year along with $1,200 for one full year of interest. No interest has been recorded yet.

Answer 1

Explanation:

The journal entries are as follows

1. Utilities expense A/c Dr $600

         To Utilities payable A/c $600

(Being the utility bill for electricity is recorded)

2. Wages expenses A/c Dr $3,000

               To Wages payable A/c $3,000

(Being the wages expense is recorded)

It is computed below:

= $100 × 3 days × 10 employees

= $3,000

3. Interest receivable A/c Dr $100

             To Interest revenue A/c $100

(Being the interest receivable is recorded)

It is calculated below:

= $1,200 ÷ 12 months

= $100