On 30 June 2019, the adjusted trial balance of Outback Car Rentals showed the following selected balances.

Both the Rentals Receivable and Interest Payable accounts had been recorded as a result of adjusting entries made on 30 June.

Required

(a) Prepare the adjusting entries that would have been recorded on 30 June for both items.

(b) Prepare any necessary reversing entries that would be made on 1 July.

(c) Prepare the entries on 10 July assuming that cash of $36 000 had been received on the outstanding rentals and $9000 was paid in interest.

(d) Assuming that any reversing entries in requirement (b) were not made, what entries would be made on 10 July for the cash receipt and cash payment?

Transcribed Image Text:

Rental revenue Interest expense Rentals receivable Interest payable $740 000 17 000 42 000 8 200