ose Contreras is the new owner of Curveball Computer Services. At the end of Jul

Question

ose Contreras is the new owner of Curveball Computer Services. At the end of July 2012, his first month of ownership, Jose is trying to prepare monthly financial statements. He has the following information for the month.

1. At July 31, Contreras owed employees $1,100 in salaries that the company will pay in August.
2. On July 1, Contreras borrowed $20,000 from a local bank on a 10-year note. The annual interest rate is 12%.
3. Service revenue unrecorded in July totaled $1,600.

Prepare the adjusting entries needed at July 31, 2012.

Explanation / Answer

2. On July 1, Contreras borrowed $29,914 from a local bank on a 10-year note. The annual interest rate is 14%. (29,914 x 14%) / 12 = 349 accrued interest Dr Interest Expense 349 Cr Interest Payable 349 3. Service revenue unrecorded in July totaled $1,642 The question doesn't state whether the service revenues were made in cash or on account. So the debit could go to either Cash or Accounts Receivable.

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.