Question 4
Scranton Motors Ltd faced the following situations. Journalize the adjusting entry needed at year
end for each situation. Each scenario should be considered independently.
a. The business has interest expense of $9,000 early in January 2017.
b. Interest revenue of $2,000 has been earned but not yet received.
c. When the business collected $12,000 in advance three months ago, the accountant
debited Cash and credited Unearned Revenue. The client was paying for two cars, one
delivered in December, the other to be delivered in February 2017.
d. Salary expense is $500 per day - Monday through Friday - and the business pays
employees each Friday. For example purposes, assume that this year, December 31 falls
on a Tuesday.
e. The unadjusted balance of the Supplies account is $2,100. The total cost of supplies on
hand is $800.
f. Equipment was purchased at the beginning of this year at a cost of $40,000. The
equipment's useful life is four years. Record the depreciation for this year and then
determine the equipment's carrying amount.
