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Garg Employment Agency - Adjusting Entries

E4-11 On December 31, the adjusted trial balance of Garg Employment Agency shows the following selected data.

Accounts Receivable $24,000 Commission Revenue $92,000
Interest Expense 7,800 Interest Payable 1,500

Analysis shows that adjusting entries were made to (1) accrue $4,200 of commission revenue and (2) accrue $1,500 interest expense.

Instructions
a. Prepare the closing entries for the temporary accounts at December 31.
b. Prepare the reversing entries on January 1.
c. Post the entries in (a) and (b). Rule and balance the accounts. (Use T accounts)
d. Prepare the entries to record (1) the collection of the accrued commissions on January 10 and (2) the payment of all interest due ($2,700) on January 15.
e. Post the entries in (d) to the temporary accounts.

Attachments

Solution Preview

Please see the attached file.

E4-11 (a)

Closing Entries

December 31 Commission Revenue 92,000
Income Summary 92,000

December 31 Income Summary 7,800
Interest Expense 7,800

December 31 Income Summary 84,200
Retained Earnings 84,200

E4-11 (b)

Reversing Entries

January 1 Interest Payable 1,500 ...

Solution Summary

This solution is comprised of a detailed explanation to (a) prepare the closing entries for the temporary accounts at December 31, (b) prepare the reversing entries on January 1, (c) post the entries in (a) and (b), (d) prepare the entries to record (1) the collection of the accrued commissions on January 10 and (2) the payment of all interest due ($2,700) on January 15, and (e) post the entries in (d) to the temporary accounts.

$2.19