Reference no: EM132583839
Question 1: XYZ Company purchases a new building for $800,000 on April 1, 2017. The building is fully financed by a mortgage. The building is expected to be useful for 30 years, after which time it will have no residual value. The company wishes to use straight-line depreciation.
Required
Record the journal entry for the purchase of the building and for the year-end adjustment.
Accrued expenses - Salaries
XYZ Company pays salaries of $4,000 every Friday. The company has a 5-day workweek and is open from Monday to Friday. This year, the December 31 falls on a Thursday.
Accrued revenues - interest
On October 1, 2017, XYZ Company loaned an employee (Fred Smith) $1,000. Fred signed a note promising to pay back the $1,000 in full plus interest at annual rate of 12%. On May 1, Fred pays back the note and accrued interest.
Required
Question 2: Record the journal entry for the initial loan, the year-end adjustment and the repayment.