On April 1, the company letamed an attorooy foe a flat monthly fee of $2,500 Pay

Question

On April 1, the company letamed an attorooy foe a flat monthly fee of $2,500 Payment for April legal services was made by the company on May 12 b.A $900,000 note payable requiros 9 1% annual intorost. or $6,825 to be paid at the 20th day of each month T ho nterost was last paid on Aprl 20 and the next payment is due on May 20 As of Aprl 30. $2,275 of interest expense has accrued c.Total weekly salaries expense lor all employees is $t 3.000 This annxml is paid at the end of Ihe day on Fnday of each frvo day workweek April 30 falls on Tuesday of this year, which means tfiat the omptoyoos had wofked two days since the test payday The next payday is May 3. The abeve three separate situations require adjusting journal entries to prepare financial statements as of April 30 tor each situation present beth the April 30 adjusting entry and the subsequent entry during May to record the payment of Ihe accrued expenses.

Explanation / Answer

Solution-

Journal Entries S.No. Date Description Post reference Debit Credit 1 1-Apr Attorney Fees A/c    2,500.00 Attorney Fees Payable A/c    2,500.00 (For Recording Attorney Fees not paid for April) 2 1-Apr Interest Expense A/c    2,275.00 Interest Expense Payable A/c    2,275.00 (For Recording intrest expenses not paid for April for $2,275) 3 1-Apr Salaries Expense A/c    5,200.00 Salaries Expense Payable A/c    5,200.00 (For Recording Salaries not paid for April for 2 days i.e 13,000/5*2) 4 12-May Attorney Fees Payable A/c    2,500.00 Cash A/c    2,500.00 (For Attorney fees paid for April) 5 3-May Salaries Expense Payable A/c    5,200.00 Cash A/c    5,200.00 (For Salaries paid for April) 6 3-May Salaries Expense A/c    7,800.00 Cash A/c    7,800.00 (For Salaries paid for May i.e. 13,000/5*3) 7 20-May Interest Expense Payable A/c    2,275.00 Cash A/c    2,275.00 (For Interest expenses paid for April period) 8 20-May Interest Expense A/c    4,550.00 Cash A/c    4,550.00 (For Interest expenses paid for May period i.e (6,825-2,275)

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