In: Accounting
Burke Bros. records adjusting entries on an annual basis. The
company has the following information available on accruals that
must be recorded for the year ended December 31, 2021: Prepare
entries for accrual adjustments and subsequent cash transactions.
Burke Bros. has a $40,000, 5.5% note payable. Interest is payable
on a monthly basis on the first of the month. Assume that Burke
Bros. made the correct interest payment on December 1, 2021, and
January 1, 2022. Burke Bros. pays its employees a total of $7,500
every second Monday for work completed the two preceding weeks.
Employees work a five-day week, Monday to Friday, and are paid for
all statutory holidays. December 31, 2021, is a Friday. Employees
were paid on Monday, December 20, 2021, and will be paid again on
Tuesday, January 4, 2022. Burke Bros. owns drilling equipment,
which it rents to customers for $1,200 per day. On December 31,
2021, a customer has had the equipment for 10 days. Burke Bros.
billed the customer for 15 days when the equipment was returned on
January 5, 2022. The customer paid the full amount that day. Burke
Bros. received the $290 December telephone bill on
January 5, 2022. The bill was paid on January 9, 2022. Burke Bros.
has a $10,000, 7% note receivable with a customer. Interest is
receivable every six months on October 31 and April 30. Assume the
customer makes the correct payment to Burke Bros. on April 30,
2021, and October 31, 2021.