Question 9BE - Intermediate Accounting (Kieso)

Question

BE3-9 (L03) Prepare the following adjusting entries at August 31 for Walgreens. (a) Interest on notes payable of \(300 is accrued. (b) Services performed but unbilled total \)1,400. (c) Salaries and wages earned by employees of \(700 have not been recorded. (d) Bad debt expense for year is \)900. Use the following account titles: Service Revenue, Accounts Receivable, Interest Expense, Interest Payable, Salaries and Wages Expense, Salaries and Wages Payable, Allowance for Doubtful Accounts, and Bad Debt Expense.

Step-by-Step Solution

Answer

The amount of salaries and wages expenses is $700.

Meaning of Adjusting Entries

Journal entries posted at year-end so that financial statements have effects of the transaction related to the current year are called adjusting entries. These entries help in fair presentation. 

Journal Entries

Date	Accounts and Explanation	Debit $	Credit $
August, 31	Interest expenses	$300
	Interest Payable		$300
August, 31	Accounts Receivable	$1,400
	Service revenue		$1,400
August, 31	Salaries and Wages expenses	$700
	Salaries and Wages payable		$700
August, 31	Bad debt expenses	$900
	Allowance for doubtful accounts		$900