Information Needed for Adjusting Journal Entries

All adjusting journal entries are completed on February $28$th$.$

a$.$ Record the interest accrued on February $28$th on the $$60,000$ loan from Part I of the case project. The annual interest rate is $6\mathrm{.}8\%.$ Please see table on next page to calculate interest. Interest accrued indicates interest has not been paid, but has accumulated on the loan. HINT...the loan was taken out on $2/1$ and the adjusting journal entry is completed on $2/28($end of month$).$

b$.$ On $2/28,$ the snow removal services have been provided and the $$300$ unearned revenue from February $1$st has been earned.

c$.$ On $2/28$ the count of office supplies indicates a balance of $$1949.$

d$.$ Record the interest accrued on February $28$th on the $$30,000$ loan from Part I of the case project. The annual interest rate is $11\%.$ Please see table on next page to calculate interest. Interest accrued indicates interest has not been paid, but has accumulated on the loan. HINT...the loan was taken out on $2/20$ and the adjusting journal entry is completed on $2/28($end of month$).$

e$.$ Monthly depreciation expense on equipment purchased on $2/1/2023$ for $$80,000.$ Salvage value is $$31000$ with a use$-$full life of $96$ months. Please round the monthly depreciation expense to two decimals.

f$.$ The Allowance for Doubtful Accounts needs to be updated. The beginning balance is $0.$ Yabba Dabba Do estimates that $4\%$ of AR will not be collected.

g$.$ Salaries of $$2400$ were accrued from February $22$nd $-$ February $28$th but will be paid on March $15$th$.$ Social Security $($OASDI$)$ and Medicare taxes were withheld using the normal tax rates and the $2023$ threshold of Social Security was not met for any of the employees. Federal Tax rate of $12\%$ and state tax of $5\%$ were withheld. Please complete the adjusting journal entries for salaries and wages expense and payroll tax expense.

Calculations of Interest

Terms of Note Payable Interest Computation for $1$ month of interest

$ $730,12\%,120$ days $ $730$ x $\mathrm{.}12$ x $1/12=$ $ $7\mathrm{.}30$

$$1,000,9\%,6$ months $$1,000$ x $\mathrm{.}09$ x $1/12=$ $ $7\mathrm{.}50$

$$2,000,6\%,1$ year $$2,000$ x $\mathrm{.}06$ x $1/12=$ $$10\mathrm{.}00$

Terms of Note Payable Interest Computation for loan taken out on $1/11$ on $1/31$

$ $730,12\%,120$ days $ $730$ x $0\mathrm{.}12$ x $(20$ days$*/365$ days$)=$ $ $2\mathrm{.}64$

$(20$ days $=31$ days in January $-$ January $11$th$)$

Even though the loan is a $120$ day loan, the interest rate of $12\%$ is an annual interest rate.

Chart of accounts

$101$ Cash

$102$ Vehicle

$103$ Accumulated Depreciation$-$Truck

$104$ Office Supplies

$105$ Account Receivable

$106$ Allowance for Doubtful Accounts

$107$ Prepaid Insurance

$108$ Account Payable

$109$ Note Payable

$110$ Unearned Revenue

$111$ Account Payable

$112$ Federal Income Tax Payable

$113$ Interest Payable

$114$ FICA Taxes Payable

$115$ State Income Tax Payable

$116$ Salaries and Wages Payable

$117$ Common Stock

$118$ Service Revenue

$119$ Utilities Expense

$120$ Salaries and Wages Expense

$121$ Office Supplies Expense

$122$ Insurance Expense

$123$ Interest Expense

$124$ Income Tax Expense

$125$ Building Rent Expense

$126$ Accounting Service Expense

$127$ Internet Expense

$128$ Supplies Expense

$129$ Depreciation Expense$-$Truck

$130$ Bad Debt Expense

$131$ Payroll Tax Expense

$132$ Income Summary

$133$ Retained Earnings

$134$Transaction letter Account Number