On December 31, Trinkets Supply Company noted the following transactions that occurredduring 2015, some or all of which might require adjustments to the books.(a)Payment of $4,300 to suppliers was made for purchases on account during the year andwas not recorded.(b)Building and land were purchased on Jan. 2 for $190,000. The building’s fair value was$141,000 at the time of purchase. The building is being depreciated over a 30-year lifeusing the straight-line method assuming no salvage value.(c)Of the $52,000 in Accounts Receivable, 5% is estimated to be uncollectible. Currently,Allowance for Bad Debtsshows a debit balance of $200.(d)On Sept 1, $80,000 was loaned to a customer on a 12-month note with interest at anannual rate of 11%.(e)During 2015, Trinkets Supply received $15,200 in advance for services, 80% of which willbe performed in 2016. The $15,200 was credited to Sales Revenue.(f)The interest expense account was debited for all interest charges incurred during the yearand shows a balance of $2,300. However, of this amount, $300 represents a discount on a60-day note payable, due January 30, 2016.Instructions:1.Give the necessary adjusting entries to bring the books up to date.2.Indicate the net change in income as a result of the foregoing adjustments.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On December 31, Trinkets Supply Company noted the following transactions that occurredduring 2015, some or all of which might require adjustments to the books.(a)Payment of $4,300 to suppliers was made for purchases on account during the year andwas not recorded.(b)Building and land were purchased on Jan. 2 for $190,000. The building’s fair value was$141,000 at the time of purchase. The building is being depreciated over a 30-year lifeusing the straight-line method assuming no salvage value.(c)Of the $52,000 in Accounts Receivable, 5% is estimated to be uncollectible. Currently,Allowance for Bad Debtsshows a debit balance of $200.(d)On Sept 1, $80,000 was loaned to a customer on a 12-month note with interest at anannual rate of 11%.(e)During 2015, Trinkets Supply received $15,200 in advance for services, 80% of which willbe performed in 2016. The $15,200 was credited to Sales Revenue.(f)The interest expense account was debited for all interest charges incurred during the yearand shows a balance of $2,300. However, of this amount, $300 represents a discount on a60-day note payable, due January 30, 2016.Instructions:1.Give the necessary adjusting entries to bring the books up to date.2.Indicate the net change in income as a result of the foregoing adjustments.

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