Recording and Reporting Current Liabilities LO9-1 [The following information app

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Recording and Reporting Current Liabilities LO9-1

[The following information applies to the questions displayed below.]

Vigeland Company completed the following transactions during Year 1. Vigeland’s fiscal year ends on December 31.

Determined wages of $30,000 were earned but not yet paid on December 31 (disregard payroll taxes).

1. Prepare journal entries for each of these transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2. Prepare the adjusting entries required on December 31. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Jan. 15 Purchased and paid for merchandise. The invoice amount was $15,500; assume a perpetual inventory system. Apr. 1 Borrowed $878,000 from Summit Bank for general use; signed a 10-month, 11% annual interest-bearing note for the money. June 14 Received a $26,000 customer deposit for services to be performed in the future. July 15 Performed $3,450 of the services paid for on June 14. Dec. 12 Received electric bill for $26,560. Vigeland plans to pay the bill in early January. 31

Determined wages of $30,000 were earned but not yet paid on December 31 (disregard payroll taxes).

1. Prepare journal entries for each of these transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2. Prepare the adjusting entries required on December 31. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Explanation / Answer

1 Journal Entries Date Accounting titles & Explanations Debit Credit 15-Jan Merchandise inventory 15,500 cash 15,500 1-Apr Cash 878,000 notes payable 878,000 14-Jun Cash 26,000 unearned revenue 26,000 15-Jul unearned revenue 3,450 service revenue 3,450 12-Dec Utilities expense 26,560 Accounts payable 26,560 31-Dec Wage expense 30,000 wages payable 30,000 2) Adjusting Entry interest expense 72435 interest payable 72,435 (878,000*11%*9/12

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