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    Garg Employment Agency: closing and reversing entries

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    ** Please see the attached file for the full problem description **

    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.

    Date Accounts and Explanations Debit Credit
    Dec 31 Commission Revenue 92,000
    Income Summary 92,000

    Dec 31 Income Summary 9,300
    Interest Expense 7,800
    Interest Payable 1,500

    (b) Prepare the reversing entries on January 1.

    Date Accounts and Explanations Debit Credit
    Jan 1 Interest Payable 1,500
    Interest Expense 7,800
    Jan 1 Accounts Payable 24,000
    Interest Payable 1,500

    (c) Post the entries in (a) and (b). Rule and balance the accounts. (Use T accounts.)

    Accounts Receivable
    Date Explanation Ref Debit Credit Balance
    Dec 31 24,000 24,000
    Dec 31 Closing 24,000 -

    Interest Expense
    Date Explanation Ref Debit Credit Balance
    Dec 31 7,800 7,800
    Dec 31 Closing 7,800 -

    Commission Revenue
    Date Explanation Ref Debit Credit Balance
    Dec 31 92,000 92,000
    Dec 31 Closing 92,000 -

    Interest Payable
    Date Explanation Ref Debit Credit Balance
    Dec 31 1,500 1,500
    Dec 31 Closing 1,500 -

    (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.

    Commissions 92,000

    (e) Post the entries in (d) to the temporary accounts.

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    https://brainmass.com/business/the-adjusting-process/garg-employment-agency-closing-reversing-entries-82638

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