Question

The following information is available for the year-ended December 31, 2018 for Sport Court Resurfacing (SCR) Corporation:

1.		On April 1, 2018 signed a bank loan for $ 10,600 with interest and principal repayable in one-year. The interest rate on the loan is 4%.
2.		SCR pays its employees $ 30,300 every other Friday which reflects a 2-week pay period or 10 working days. December 31, 2018 falls on a Monday so employees will not get paid for the work they completed on this day until January 11, 2019.
3.		Estimated income tax payable for the year end is $ 7,070 which is payable January 31, 2019.
4.		Utility expenses of $ 490 for the month of December were unrecorded and unpaid. They are due January 21, 2019.
5.		SCR provided tennis court resurfacing to a local tennis club. At the end of the year the club owed SCR $ 15,800. SCR billed the club on January 2, 2019 and collected the full amount on January 10, 2019.

Prepare the adjusting entries required on December 31, assuming SCR records adjusting entries annually. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31
Dec. 31
Dec. 31
Dec. 31
Dec. 31

Prepare the subsequent entry for each accrual as follows: (1) collection of the $ 15,800 on January 10, 2019; (2) payment of salaries on January 11, 2019; (3) payment of utility expenses on January 21, 2019; (4) payment of income tax on January 31, 2019; and (5) repayment of bank loan on March 31, 2019. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 10Jan. 11Jan. 21Jan. 31Mar. 31
Jan. 11
Jan. 10Jan. 11Jan. 21Jan. 31Mar. 31
Jan. 10Jan. 11Jan. 21Jan. 31Mar. 31
Mar. 31

Answer 1

SOLUTION

A. Adjusting Entries

Date	Accounts titles and Explanation	Debit ($)	Credit ($)
Dec.31	Interest expense (10,600*4%*9/12)	318
	Interest expense payable		318
Dec.31	Salaries expense Account (30,300*1/10)	3,030
	Salaries expense Payable		3,030
Dec.31	Income Tax expense Account	7,070
	Income tax payable		7,070
Dec.31	Utilities expense Accoount	490
	Utilities expense payable		490
Dec.31	Accounts receivable	15,800
	Service revenue		15,800

B. Subsequent entry-

Date	Accounts titles and Explanation	Debit ($)	Credit ($)
Jan.10	Cash	15,800
	Accounts receivable		15,800
Jan.11	Salaries expense	27,270
	Salaries expense payable	3,030
	Cash		30,300
Jan.21	Utilities expense payable	490
	Cash		490
Jan.31	Income tax payable	7,070
	Cash		7,070
Mar.31	Bank Loan payable	10,600
	Interest expense payable	318
	Interest expense (10,600*4%*3/12)	106
	Cash		11,024