On 31 March 2010, for the Bayan Cafe was preparing to make adjusting entries in order to
Question:
On 31 March 2010, for the Bayan Cafe was preparing to make adjusting entries in order to prepare the quarterly financial statements. 31 March 2010 falls on a Wednesday. Based on the following information, what adjusting entries should the account record?
a. On 15 February that same year, Bayan Cafe had borrowed $70 000 from the bank. The interest rate on the loan was 8% per annum. No payments are made on the loan until 15 July 2010 when the loan is due in full.
b. Four employees work for the Bayan Cafe and are paid at the rate of $300 per week each. The work week is from Sunday until Friday. The Cafe is closed Saturday. Employees are paid on the Monday following of the following week.
c. The Bayan Cafe paid rent in advance for six months on 1 December 2009 in the amount of $10 800.
d. On 30 March 2010, the Cafe received an order from a customer to cater a birthday party on 2 March 2010. The customer paid half of the total amount of $1 500 in cash. Though the cash was deposited in the bank, no journal entry has been made in the accounting records.
e. The manager of the Bayan Cafe estimates that the catering job (Item
d) will incur expenses of$1 700.
f. On 31 March, the Cafe was hired to cater a business breakfast. The price for the job was $3,330. Because the job was rush and requested by the customer at the last minute, no invoice has yet been sent for payment.
g. The Bayan Cafe had purchased one year’s coverage from an insurance provider that went into effect on 15 March 2010. The provider has yet to send an invoice for the $14 000 annual insurance premium.
Step by Step Answer: