Vigeland Company completed the following transactions during Year 1. Vigeland’s

Question

Vigeland Company completed the following transactions during Year 1. Vigeland’s fiscal year ends on December 31. Jan. 15 Purchased and paid for merchandise. The invoice amount was $15,800; assume a perpetual inventory system. Apr. 1 Borrowed $710,000 from Summit Bank for general use; signed a 10-month, 7% 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 $4,650 of the services paid for on June 14. Dec. 12 Received electric bill for $26,260. Vigeland plans to pay the bill in early January. 31 Determined wages of $22,000 were earned but not yet paid on December 31 (disregard payroll taxes).

Required: 1. Prepare journal entries for each of these transactions.

                 2. Prepare the adjusting entries required on December 31.

Explanation / Answer

1) date Accouting titles & explanations debit Credit 15-Jan Merchandise inventory 15,800 accounts payable 15,800 1-Apr cash 710,000 notes payable 710,000 14-Jun cash 26,000 unearned service revenue 26,000 15-Jul unearned service revenue 4,650 service revenue 4,650 12-Dec utility expense 26,260 Accounts payable 26,260 31-Dec Wage expense 22,000 wages payable 22,000 Adjusting entry 31-Dec interest expense 37275 interest payable 37,275 (710,000*7%*9/12

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