Plex Paintball records adjusting entries on an annual basis. The company has the following information available on accruals that must be recorded for the year ended May 31, 2017.
1. Plex Paintball has a 4% note payable with its bank for $48,000. Interest is payable on a monthly basis on the first of the month.
2. Plex Paintball is open seven days a week and employees are paid a total of $3,500 every Monday for a seven-day (Monday-Sunday) workweek. May 31, 2017, is a Wednesday so employees will have worked three days (Monday-Wednesday) before the year end that they have not been paid for as at May 31. Employees will be paid next on Monday, June 5, 2017.
3. Plex Paintball receives a commission from Pizza Shop next door for all pizzas sold to customers using the Plex Paintball facility. The amount owing for May is $520, which Pizza Shop will pay on June 7, 2017.
4. The May utility bill for $425 was unrecorded on May 31. Plex Paintball paid the bill on June 9, 2017.
5. Plex Paintball sold some equipment on May 1, 2017, in exchange for a $6,000, 6% note receivable. The principal and interest are due on August 1, 2017.
Instructions
(a) For each of the above items, prepare the adjusting entry required at May 31, 2017.
(b) For each of the above items, prepare the journal entry to record the related cash transaction in 2018. Assume all payments and receipts are made as indicated.