Could anyone explain how to put these adjusted balances into a journal entry?
1. Accrued interest earned but not yet collected on the investments account (account #150) balance has been calculated to be $4,000.
2. Accrued interest on the note receivable that originated on December 1 (to Woodson Corp.) needs to be calculated and recorded. Lent $50,000 in cash to one of its suppliers (Check #501 payable to Woodson Corp). The supplier signed a 1-year, 12% promissory note with a face value of $50,000. The note’s face value plus interest is due on 12/1/X6.
3. Wolfpack uses the percentage of accounts receivable method to estimate bad debts. Wolfpack estimates that 3% of its ending gross receivable balance is uncollectible. The amount is $1240.
4. A physical count shows the ending inventory balance at 12/31/X5 should be $100,000.
5. An end of year analysis of its insurance policies shows that the balance still prepaid on December 31, 20X5 should be $2,000.
6. An end of year analysis of its rental agreements (as a lessee) shows that the balance still prepaid on December 31, 20X5 should be $4,000.
7. Depreciation expense on the buildings is $35,000 for the year.
8. Depreciation expense on the equipment is $20,000 for the year.
9. Amortization on the patent is $25,000 for the year.
10. Supplies on hand total $3,000.
11. Accrued interest on all notes payable for the month of December has been calculated to be $4,650. This interest will be paid in 20X6.
12. Wolfpack accrues a $5,000 bonus to its manager for benchmarks the company met during 20X5. The bonus will be paid in January of 20X6.
13. Wolfpack makes the necessary year- end adjustment to recognize rent revenue by receiving $9,000 cash for a three-month rental of equipment.
14. Management estimates the “Estimated Sales Return Liability” credit balance at the end of December should be $4,000.
To put these adjusted balances into a journal entry, you will need to follow the basic format of a journal entry:
1. Start with the date of the journal entry.
2. Identify the accounts affected by the transaction. For each transaction, you will have at least two accounts involved - one account will be debited (increased) and the other will be credited (decreased).
3. Determine the amounts to be debited and credited for each account.
4. Write the journal entry, starting with the debit account(s) followed by the credit account(s). Indicate the account number and name for each account.
Now, let's go through each transaction and create the journal entry for each:
1. Accrued interest earned but not yet collected on the investments account (account #150) balance has been calculated to be $4,000.
Debit: Accrued Interest Receivable (account #150) - $4,000
Credit: Interest Income (or Investment Income) (appropriate account) - $4,000
2. Accrued interest on the note receivable that originated on December 1 (to Woodson Corp.) needs to be calculated and recorded.
Debit: Accrued Interest Receivable (appropriate account) - calculated amount
Credit: Interest Revenue (appropriate account) - calculated amount
3. Wolfpack estimates that 3% of its ending gross receivable balance is uncollectible. The amount is $1240.
Debit: Bad Debt Expense - $1,240
Credit: Allowance for Doubtful Accounts (or Provision for Bad Debts) - $1,240
4. A physical count shows the ending inventory balance at 12/31/X5 should be $100,000.
Debit: Inventory (appropriate account) - $100,000
Credit: None (if adjusting the inventory balance)
5. An end of year analysis of its insurance policies shows that the balance still prepaid on December 31, 20X5 should be $2,000.
Debit: Prepaid Insurance (appropriate account) - $2,000
Credit: Insurance Expense - $2,000
6. An end of year analysis of its rental agreements (as a lessee) shows that the balance still prepaid on December 31, 20X5 should be $4,000.
Debit: Prepaid Rent (appropriate account) - $4,000
Credit: Rent Expense - $4,000
7. Depreciation expense on the buildings is $35,000 for the year.
Debit: Depreciation Expense - Buildings - $35,000
Credit: Accumulated Depreciation - Buildings - $35,000
8. Depreciation expense on the equipment is $20,000 for the year.
Debit: Depreciation Expense - Equipment - $20,000
Credit: Accumulated Depreciation - Equipment - $20,000
9. Amortization on the patent is $25,000 for the year.
Debit: Amortization Expense - Patent - $25,000
Credit: Accumulated Amortization - Patent - $25,000
10. Supplies on hand total $3,000.
Debit: Supplies Expense - $3,000
Credit: Supplies (appropriate account) - $3,000
11. Accrued interest on all notes payable for the month of December has been calculated to be $4,650. This interest will be paid in 20X6.
Debit: Interest Expense (appropriate account) - $4,650
Credit: Accrued Interest Payable (appropriate account) - $4,650
12. Wolfpack accrues a $5,000 bonus to its manager for benchmarks the company met during 20X5. The bonus will be paid in January of 20X6.
Debit: Bonus Expense (appropriate account) - $5,000
Credit: Accrued Bonus Payable (appropriate account) - $5,000
13. Wolfpack makes the necessary year-end adjustment to recognize rent revenue by receiving $9,000 cash for a three-month rental of equipment.
Debit: Unearned Rent Revenue (appropriate account) - $9,000
Credit: Rent Revenue (appropriate account) - $9,000
14. Management estimates the "Estimated Sales Return Liability" credit balance at the end of December should be $4,000.
Debit: Estimated Sales Return Liability (appropriate account) - $4,000
Credit: Sales Revenue (appropriate account) - $4,000
Please note that the appropriate accounts may vary depending on your specific chart of accounts and accounting system. It's important to consult with your accounting department or refer to your company's accounting policies for guidance.