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    Garg Employment Agency - Adjusting Entries

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    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.

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    https://brainmass.com/business/business-math/garg-employment-agency-adjusting-entries-90615

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    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

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