Identify the Type of Adjustment Necessary (The Type of Item

question 52

Essay

Identify the type of adjustment necessary (the type of item involved) and record the transaction for the event. Make sure to include the ending balances after adjustment.
On June 1, Tasty Sausage Corp. borrowed $25,000 from the bank by signing a promissory note from the bank, with 8% interest. The note is due in three months. Interest for June has been incurred but not yet recorded. The interest to accrue for June is $175. The June 30 adjustment is:

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Definitions:

Absorption Costing

A system in accounting that compiles all the expenses tied to production, such as direct material costs, direct labor payments, and both styles of manufacturing overhead, fixed and variable, and applies them to the price of a product.

Fixed Manufacturing Overhead

Costs that do not vary with the level of production, such as rent for the manufacturing facility or salaries of permanent staff.

Common Fixed Expenses

Costs that are shared across different segments or departments of a business and do not vary with the level of production or sales.

On-Site Supervisor

An individual responsible for overseeing and managing workers or operations at a specific physical location.