The following adjustments need to be made before the financial statements can be prepared at the end of the year. Task 1: Enter the necessary journal entries into the template provided and provide the journal entry for each. December Interest on a bank loan is due on January 2nd of the following year: accrue $1,000. A contractor (outside services) has finished work on December 31st, but the invoice will not be received until January 7th of the following year: accrue $750. A rent payment was made on December 1st for three months from December 1st to February 28th of the following year (6,000 in total). Record the transaction properly. The companys part-time employees worked a total of 50 hours in December, but will get paid only by January 5th. The hourly rate is $15. The company must record the payment of its annual insurance premium for next year. The annual premium is $1,200, an adjustment is necessary to prepaid insurance. Task 2: Provide the adjusted trial balance (combine exercises 2.1 and 2.2 to show the adjusted trial balance).
| Adjustment |
Account and details |
REF |
Debit |
Credit |
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| 1 |
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Interest Expense |
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Interest Payable |
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To record December interest expense to be paid in January |
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| 2 |
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Expense for Outside Services |
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Accounts Payable |
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To record liability towards contractor |
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| 3 |
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Rental Expenses |
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Prepaid Rent |
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Cash |
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To record the appropiate rental expense for the month |
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| 4 |
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Wage Expense |
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Wages Payable |
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To record liability towards employees |
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| 5 |
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Prepaid Insurance |
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Cash |
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To record insurance payment for the following year |
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Total |
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$0 |
$0 |
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