Question #1 (a)
I am working on the adjusting balance sheet. I am close to where I need to be in my adjustments and wondering if I am missing a step to figuring a few things out.
If money is earned but not unpaid or recorded for salaries, and the next payday is after the closing. Would you take all the money together and divide it by the number of days in the payroll and that would be your posting to make the adjustment on a balance sheet.
For example: On the last day of the year earned salaries are $600, but is unpaid and unrecorded. The next payday is 2 days later, when the total salaries will be paid $950, total payroll of $1550.
I am assuming the payroll covers a 5 day work week.
This would mean each days pay is $310. Multiply that by 3 days and set up $930 into Salaries expense of $930 ( as a debit), then the offset would be Salaries payable of $930 (as a credit). For the remaining amount of $560, should this be set up on my journal adjustments for the next month? Please tell me if I am figuring this incorrectly and if I am how to correct my errors.
Question #2 (c)
If interest is due every three months and the unpaid and unrecorded amount at the end of the year is $1200. But the next payment is not due until January, which is in the amount of $1450.
Should the $1200 just be set up in the December adjusted balance sheet under interest payable as a credit, and interest expense as a debit. I know the book states to debit the interest expanse and credit the interest payable but the original entry should be done as a credit to interest payable. I am all confused on this part. My other part to this problem is how would I figure the amount that should be in December and January.
Should the $1450 just be set up in the January journal entry postings?
Question #3 (e)
If fees are unrecorded and earned in the month of December but you know the money will be collected in January. Should the fees be set up in fees earned account as a credit, and in the accounts receivable as a debit. Also, if the company is expected to collect $ for an additional fees earned in January, how would the December balance sheet be affected.
Question #4 (f)
Depreciation expense for the entire year is $10,000. Should the depreciation be added (credited) to the accrued depreciation account and shown as an expense in the depreciation expense account as a (debit). Just a little confused as to what needs to be done with this section.
Question #1 (a):
To correctly adjust the balance sheet for unpaid and unrecorded salaries, you need to take into account the number of days for which the salaries were earned but unpaid. Here's how you can calculate the adjustment:
Step 1: Determine the daily rate of pay. Divide the total salaries earned by the number of days in the payroll period. In this case, since the payroll covers a 5-day work week and the salaries earned are $600, the daily rate of pay would be $120 ($600 / 5 days).
Step 2: Calculate the adjustment amount for the days between the year-end and the next payday. Since there are 2 days between the year-end and the next payday, multiply the daily rate of pay by 2. In this case, it would be $240 ($120 * 2 days).
Step 3: Make the adjusting journal entry. Debit the Salaries Expense account for the adjustment amount ($240) and credit the Salaries Payable account for the same amount ($240).
Regarding the remaining amount of $560, as per your question, if it pertains to salaries earned in the next month, it should not be included in the December adjustments. Instead, you will need to account for it in the adjustments for the next month when it becomes payable and recorded.
Question #2 (c):
To adjust the balance sheet for unpaid and unrecorded interest, follow these steps:
Step 1: Determine the adjustment amount for the unpaid and unrecorded interest at the end of the year. In this case, it is $1200.
Step 2: Make the adjusting journal entry. Debit the Interest Expense account for the adjustment amount ($1200) and credit the Interest Payable account for the same amount ($1200).
Regarding the next payment of $1450 due in January, it should not be included in the December adjustments. Instead, you will need to account for it in the adjustments for January when it becomes payable and recorded.
Question #3 (e):
To record unrecorded fees earned in December but to be collected in January, follow these steps:
Step 1: Debit the Fees Earned account for the amount of fees earned in December.
Step 2: Credit the Accounts Receivable account for the same amount to reflect that the fees are yet to be collected.
Regarding the additional fees earned in January, it will not affect the December balance sheet as it belongs to the subsequent period. You will need to account for it in the adjustments for January when it becomes earned and recorded.
Question #4 (f):
To account for depreciation expense for the entire year, follow these steps:
Step 1: Determine the depreciation expense for the year. In this case, it is $10,000.
Step 2: Debit the Depreciation Expense account for the depreciation expense amount ($10,000).
Step 3: Credit the Accumulated Depreciation account for the same amount ($10,000) to reflect the accumulated depreciation on the corresponding assets.
By doing so, you will expense the depreciation amount and update the accumulated depreciation, which is a contra-asset account used to reduce the value of an asset on the balance sheet.