Notes Payable Common Stock Retained Earnings Sales Revenue Cost of Goods Sold Salary Expense Rent Expense Total 12/31/2020, the end of its fiscal year. Cairo adjusts its accounts on an annual basis. 1. The Cairo Company had the following account balances on its unadjusted trial balance at Account Cash Inventory Prepaid Advertising Equipment Accumulated Depreciation • . ● Debit 130,000 37,000 25,000 168,000 300,000 120,000 42,000 822,000 Credit Additional information: On 11/30/2020, Cairo paid $42.000 for a one year rent contract. The rent contract runs 12/1/2020 through 11/30/2021. On 7/1/2020, Cairo borrowed $200,000 from the bank. The note requires principal and interest at 8% to be paid on 7/1/2021. Cairo uses straight-line depreciation for its equipment. The estimated useful life of the equipment is 6 years and the estimated residual value is zero. • The Cairo Co. began 2020 with no balance in Prepaid Advertising. Of the payments for advertising made in 2020, $12,000 of it was paid in advance. 56,000 200,000 40,000 26,000 500,000 822,000
Notes Payable Common Stock Retained Earnings Sales Revenue Cost of Goods Sold Salary Expense Rent Expense Total 12/31/2020, the end of its fiscal year. Cairo adjusts its accounts on an annual basis. 1. The Cairo Company had the following account balances on its unadjusted trial balance at Account Cash Inventory Prepaid Advertising Equipment Accumulated Depreciation • . ● Debit 130,000 37,000 25,000 168,000 300,000 120,000 42,000 822,000 Credit Additional information: On 11/30/2020, Cairo paid $42.000 for a one year rent contract. The rent contract runs 12/1/2020 through 11/30/2021. On 7/1/2020, Cairo borrowed $200,000 from the bank. The note requires principal and interest at 8% to be paid on 7/1/2021. Cairo uses straight-line depreciation for its equipment. The estimated useful life of the equipment is 6 years and the estimated residual value is zero. • The Cairo Co. began 2020 with no balance in Prepaid Advertising. Of the payments for advertising made in 2020, $12,000 of it was paid in advance. 56,000 200,000 40,000 26,000 500,000 822,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:1a. Provide the adjusting journal entries that Cairo would record on 12/31/2020.
Account name
Debit
Credit
Transcribed Image Text:●
12/31/2020, the end of its fiscal year. Cairo adjusts its accounts on an annual basis.
1. The Cairo Company had the following account balances on its unadjusted trial balance at
Account
Cash
Inventory
Prepaid Advertising
Equipment
Accumulated Depreciation
Notes Payable
Common Stock
Retained Earnings
Sales Revenue
Cost of Goods Sold
Salary Expense
Rent Expense
Total
.
Debit
130,000
37,000
25,000
168,000
300,000
120,000
42,000
822,000
Credit
822,000
Additional information:
On 11/30/2020, Cairo paid $42.000 for a one year rent contract. The rent contract runs
12/1/2020 through 11/30/2021.
• On 7/1/2020, Cairo borrowed $200,000 from the bank. The note requires principal and
interest at 8% to be paid on 7/1/2021.
56,000
200,000
40,000
26,000
500,000
Cairo uses straight-line depreciation for its equipment. The estimated useful life of the
equipment is 6 years and the estimated residual value is zero.
The Cairo Co. began 2020 with no balance in Prepaid Advertising. Of the payments for
advertising made in 2020, $12,000 of it was paid in advance.
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