Prepare the current liabilities section of the balance sheet

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Reference no: EM131819708

Question: Journalizing and posting liabilities The general ledger of Prompt Ship at June 30, 2016, the end of the company's fiscal year, includes the following account balances before payroll and adjusting entries.

The additional data needed to develop the payroll and adjusting entries at June 30 are as follows:

a. The long-term debt is payable in annual installments of $48,000, with the next installment due on July 31. On that date, Prompt Ship will also pay one year's interest at 8%. Interest was paid on July 31 of the preceding year. Make the adjusting entry to accrue interest expense at year-end.

b. Gross unpaid salaries for the last payroll of the fiscal year were $4,800. Assume that employee income taxes withheld are $970 and that all earnings are subject to OASDI.

c. Record the associated employer taxes payable for the last payroll of the fiscal year, $4,800. Assume that the earnings are not subject to unemployment.

d. On February 1, the company collected one year's rent of $6,600 in advance.

Requirements: 1. Using the T-accounts opened for you, insert the unadjusted June 30 balances.

2. Journalize and post the June 30 payroll and adjusting entries to the accounts. Identify each adjusting entry by letter.

3. Prepare the current liabilities section of the balance sheet at June 30, 2016.

Reference no: EM131819708

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