The general ledger of Speedy Ship at June 30, 2016 the end of the company's fiscal year, includes the following account balances before payroll and adjusting entries:
1. Using the T-accounts opened for you, insert the unadjusted June 30 balances.
2. Journalize and post the June 30 payroll and adjusting entries to the accounts. Identify each adjusting entry by letter.
3. Prepare the current liabilities section of the balance sheet at June 30, 2016.
The additional data needed to develop the payroll and adjusting entries at June 30 are as follows:
Requirements 1 and 2. Using the T-accounts opened for you, insert the unadjusted June 30 balances. Journalize and post the June 30 adjusting entries to the accounts. Identify each adjusting entry by letter. We will start with Requirement 2, journalizing the journal entries, to assist us in posting to the T-accounts. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)
a. The long-term debt is payable in annual installments of $ 42,000, with the next installment due on July 31. On that date, Speedy Ship will also pay one year's interest at 8 %. Interest was paid on July 31 of the preceding year. Make the adjusting entry to accrue interest expense at year-end.