On December 31, the unadjusted trial balance of Masterson Employment Agency shows the following selected data:
Accounts receivable ............. $24,000 ................... Cash .......... $ 7,600
Interest expense ..................... 7,800 ...... Service revenue ........... 92,000
I. Masterson, capital 48,000 Interest payable 0
Analysis shows that adjusting entries are required to
(1) Accrue $4,400 of service revenue, and
(2) Accrue $1,500 of interest expense.
Instructions
(a) Prepare and post
(1) The adjusting entries and
(2) The closing entries for the temporary accounts at December 31.
(b) Prepare and post reversing entries on January 1.
(c) Prepare and post the entries to record
(1) The collection of $6,200 of service revenue (including the accrued service revenue from December 31) on January 10, and
(2) The payment of $2,235 interest on January 31 (consisting of the accrued interest from December 31 plus January's interest)?