Prepare journal entry to record subsequent cash transaction

Reference no: EM131823993

Question: Greenock Limited has the following information available for accruals for the year ended December 31, 2017. The company adjusts its accounts annually.

1. The December utility bill for $425 was unrecorded on December 31. Greenock paid the bill on January 11.

2. Greenock is open 7 days a week and employees are paid a total of $3,500 every Monday for a 7-day (Monday-Sunday) workweek. December 31 is a Thursday, so employees will have worked 4 days (Monday, December 28-Thursday, December 31) that they have not been paid for by year-end. Employees will be paid next on January 4.

3. Greenock signed a $45,000, 5% bank loan on November 1, 2016, due in 2 years. Interest is payable on the first day of each following month.

4. Greenock receives a fee from Pizza Shop next door for all pizzas sold to customers using Greenock's facility. The amount owed for December is $300, which Pizza Shop will pay on January 4. (Hint: Use the Service Revenue account.)

5. Greenock rented some of its unused warehouse space to a client for $6,000 a month, payable the first day of the following month. It received the rent for the month of December on January 2.

Instructions: (a) For each situation, prepare the adjusting entry required at December 31. (Round all calculations to the nearest dollar.)

(b) For each situation, prepare the journal entry to record the subsequent cash transaction in 2018.

Reference no: EM131823993

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