1 Help Assume $$ \& $$ no other adjusting entries are made during the year. a. Salaries Payable. At year-end, salaries expense of $$ \$ 17,500 $$ has been incurred by the company, but is not yet paid to employees b. Interest Payable. At its December 31 year-end, the company owes $$ \$ 350 $$ of interest on a loan. That interest will not be paid until sometime in January of the next year. c. Interest Payable. At its December 31 year-end, the company holds a mortgage payable that has incurred $$ \$ 975 $$ in annual interest that is neither recorded nor paid. The company intends to pay the interest on January 7 of the next year

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Below are the adjusting entries that would be recorded at year‐end for each situation. (Remember that since the expenses have been incurred but not yet paid, we debit the appropriate expense account and credit a liability account.)

a. Salaries Expense Adjustment  
  Debit Salaries Expense    $17,500  
  Credit Salaries Payable    $17,500

b. Interest Expense on Loan Adjustment  
  Debit Interest Expense    $350  
  Credit Interest Payable    $350

c. Mortgage Interest Expense Adjustment  
  Debit Interest Expense    $975  
  Credit Interest Payable    $975

Each entry records the expense in the current period even though the cash will be paid in the next period.
Here are the adjusting entries needed at year-end: a. Salaries Expense Debit Salaries Expense $17,500 Credit Salaries Payable $17,500 b. Interest Expense on Loan Debit Interest Expense $350 Credit Interest Payable $350 c. Mortgage Interest Expense Debit Interest Expense $975 Credit Interest Payable $975 These entries recognize expenses incurred but not yet paid.

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