Problem 4-2A Zheng Corporation had the following selected transactions in the mo

Question

Problem 4-2A Zheng Corporation had the following selected transactions in the month of March. The company adjusts its accounts monthly 1. The company has a 12%,?12,600 bank loan payable due in one year. Interest is payable on the first day of each following month and was last paid on March 1 2. At the end of March, the company earned $410 interest on its investments. The bank deposited this amount in Zheng's cash account on April 1. 3. Zheng has ive employees who each earn $250 a day. Salaries are normally paid on Mondays for work completed Monday through Friday of the previous week. Salaries were last paid on Monday, March 26 March 31 falls on a Saturday this year. Salaries will be paid next on Monday, April 2 4. At the end of March, the company owed the utility company $640 and the telephone company $280 for services received during the month. These bills were paid on April 10. (Hint: Use the Utilities Expense account for the utility and telephone services.) 5. At the end of March, Zheng has earned service revenue of $3,100 that it has not yet billed. It bills its clients for this amount on April 4. On April 30, it collects $2,450 of this amount due

Explanation / Answer

the following are the adjusting entries:

journal entries on April 4:

Date accounts debit credit mar 31 Interest expnese a/c $126 .............To Interest payable a/c 126 (amount = 12600*12% * 1/12 =>$126) mar 31 Interest receivable a/c 410 ..............To Interest revenue a/c 410 mar 31 salaries and wages expense a/c 1,250 ....................To Salaries and wages payable a/c 1,250 (amount = $250 * 5 days =>$1,250) mar 31 utilities expense a/c (640+280) 920 .................To utilities expense payable a/c 920 mar 31 no entry (entry is made on april 4)

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