Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / a)Question 1 (20 marks) The following accounts appeared in the December 31 trial balance: 0

a)Question 1 (20 marks) The following accounts appeared in the December 31 trial balance: 0

Accounting

a)Question 1 (20 marks) The following accounts appeared in the December 31 trial balance: 0.000 Ace. No pay Solare Salinese 2.000 Inn????? ????? 2000 Consider the following transactions The equipment has a useful life of 16 years and a salvage value of S40.000 ST-line depreciation applies b. The note payable is a 90-day note given to the bank on October 20 and bearing interest at 10%. c. In December, 2,000 coupons were sold at $25 cach, they can be used for admission any time after January 1. d. of the advertising expense balance, S1,100 is paid in advance c. Salaries accrued but unpaid are $11,800. Required: Part a. (10 marks) Prepare the adjusting entries necessary on December 31 Part b. (10 marks) What amounts should be shown for cach of the following on the income statement for the year? Interest expense Sales revenue Advertising expense Salaries and wages expense

pur-new-sol

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE

Answer Preview

Part - a

Adjustment Entries

Date Description Debit Credit
December, 31      
a) Depricition Account 57500  
  Accumulated Depriciation Account   57500
  ( Being depriciation expense adjusted )    
       
b) Interest Expense Account 4586  
  Outstanding Interest Expense Account   4586
  ( Being interest expense adjusted )    
       
c) Sales Revenue Account ( 2000 X 25 ) 50000  
  Unearned Sales Revenue Account   50000
  ( Being sales revenue adjusted )    
       
d) Prepaid Advertising Expense Account 1100  
  Advertising Expense Account   1100
  ( Being advertisisng expense adjusted )    
       
e) Salaries Expense Account 11800  
  Outstanding Salaries Expense Account   11800
  ( Being outstanding salaries adjusted )    
       

Working Note

1)

Straight Line Depriciation = ( Value of the Asset - Salvage Value ) / Life of the Asset

So, the Depriciation of the Equipment = [ ( 960000 - 40000 ) / 16 ] = $57500

2)

Interest On Notes Payble = (186000 X 10/100 X 90/365 ) = $4586

Part -b)

Interest Expense = ( Interest Expense + Outstanding Insureance Expense ) [ 9000 + (186000 X 10 /100 X 90/365 ) ] = $13586

Sales Revenue = ( Sales Revenue - Unearned Sales Revenue ) = ( 750000 - 50000 ) = $700000

Advertising Expense = ( Advertising Expense - Prepaid Expense ) = ( 62000 - 1100 ) = $60900

Salaries and Wages Expense = ( Salaries and Wages Expense + Outstanding Salaries and Wages Expense ) = ( 80000 + 11800 ) = $91800