ACCRUED LIABILITIES Thornwood Tile had the following items that require adjusting entries at the end of the year.

. Thornwood pays payroll of $30,000 every other Friday. This year December 31 falls on the Tuesday before payday.

. Thornwood purchased $100,000 of tile on March 1 with a note payable requiring 12 percent interest. The interest and principal on this note are due within one year.

As of December 31, Thornwood had not made any principal or interest payments.

. Thornwood’s earned income is $500,000 for the year for tax purposes. Its effective tax rate is 25 percent. These taxes must be paid by April 15 of next year.

Required:

Prepare the adjusting journal entries to record these transactions at the end of the current year.

Exercise