iny,uuaiy U, wien Lovrek pays the payroll. ssume the company does use reversing entries. Prepare the December 31 adjusting entry, the January 1 reversing entry, and the entry on Monday, January 6, when Lovrek pays the payroll. E4-19 On December 31, the adjusted trial balance of Shihata Employment Agency shows P the following selected data. Accounts Receivable Interest Expense $24,500 7,700 Service Revenue $92,500 Interest Payable 2,200 Analysis shows that adjusting entries were made to (1) accrue $5,000 of service revenue and (2) accrue $2,200 interest expense Instructions (a) Prepare the closing entries for the temporary accounts shown above at December 31. (b) Prepare the reversing entries on January 1 (c) Post the entries in (a) and (b). Underline and balance the accounts. (Use T-accounts.) (d) Prepare the entries to record (1) the collection of the accrued revenue on January 10 and (2) the payment of all interest due ($3,000) on January 15. e) Post the entries in (d) to the temporary accounts. EXERCISES: SET B AND CHALLENGE EXERCISES