Chapter 4
Current Liabilities
164
Application Questions Group A
AP-1A (
2
)
A company has repairs completed on the heating system. The service man hands the
accountant an invoice for $1,000 dated May 25, 2017 due in one month. Write the journal
entry the company must prepare to record this transaction.
Date
Account Title and Explanation
Debit
Credit
AP-2A (
8
)
A company uses substantial amounts of utilities (electricity and water) with an average cost
of $6,000 per monthly billing period. They receive and pay the actual bill on the 15th of each
month. In January 2017, the company received its bill in the amount of $6,207 for the period
December 15 to January 15. The bill was paid right away. Assume the company prepares
monthly financial statements.
Required
a) Record the journal entry on December 31, 2016 for the estimate of utilities expense for the
period December 16–31, 2016.
b) Record the journal entry required for payment of the bill on January 15, 2017.
Date
Account Title and Explanation
Debit
Credit
