Question

Metlock, Inc. 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 $385 was unrecorded on December 31. Metlock paid the bill on January 11. 2. Metlock is open 7 days a week and employees are paid a total of $3,150 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. Metlock signed a $40,500, 5% bank loan on November 1, 2016, due in 2 years. Interest is payable on the first day of each following month. 4. Metlock receives a fee from Pizza Shop next door for all pizzas sold to customers using Metlock’s facility. The amount owed for December is $270, which Pizza Shop will pay on January 4. (Hint: Use the Service Revenue account.) 5. Metlock rented some of its unused warehouse space to a client for $5,400 a month, payable the first day of the following month. It received the rent for the month of December on January 2.

Answer 1

Adjusting entries:
Dec 31,2019	Utilities expense	385
	Accounts Payable		385
Dec 31,2019	Salaries and wages expense	1800		=3150*4/7
	Salaries and wages payable		1800
Dec 31,2019	Interest expense	169		=40500*5%/12
	Interest payable		169
Dec 31,2019	Accounts Receivable	270
	Service Revenue		270
Dec 31,2019	Accounts Receivable	5400
	Rent Revenue		5400
Payment/ Receipt:
Jan 11,2019	Accounts Payable	385
	Cash		385
Jan 4,2019	Salaries and wages expense	1350		=3150*3/7
	Salaries and wages payable	1800
	Cash		3150
Jan 1,2019	Interest payable	169
	Cash		169
Jan 4,2019	Cash	270
	Accounts Receivable		270
Jan 2,2019	Cash	5400
	Accounts Receivable		5400