Prepare the necessary adjusting journal entries on June 30, 2020. [Narrations are not required] Prepare the Adjusted Trial balance for the period ending June 30, 2020. Using the Adjusted trial balance, generate the statements requested by MNB, i.e. A Multiple-step income statement & a Statement of owner’s equity for the year ended June 30, 2020 d) A Classified balance sheet, in report format, at June 30, 2020
Mortgages
A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
The problem to be resolved:
Ready Hospital Supplies (RHS) trades in the buying and selling of supplies primarily targeting hospitals and private medical practitioners. During the COVID-19 pandemic, the business has experienced a rapid increase in demand and RHS is faced with the need for additional financing. You and your group members are the accounting associate supporting the credit request to Millionaire National Bank (MNB). The corporate banking head at MNB is requesting a full set of financial statements to ensure that granting the loan would be financially feasible during a period when many similar businesses are facing delinquency and foreclosures. Your head of finance has furnished you with the latest
Ready Hospital Supplies
Trial Balance as at June 30, 2020
|
|
Dr $ |
Cr $ |
|
Cash |
127,000 |
|
|
|
151,000 |
|
|
Allowance for Bad-Debts |
|
12,500 |
|
Merchandise Inventory |
187,500 |
|
|
Store Supplies |
58,000 |
|
|
Prepaid Insurance |
72,000 |
|
|
Prepaid Rent |
56,000 |
|
|
Furniture & Fixtures |
800,000 |
|
|
|
|
256,000 |
|
Computer Equipment |
450,000 |
|
|
Accumulated Depreciation: Computer Equipment |
|
|
|
Accounts Payable |
|
133,500 |
|
Salaries Payable |
|
|
|
Interest Payable |
|
27,000 |
|
Unearned Sales Revenue |
|
82,000 |
|
Long-Term Loan |
|
360,000 |
|
Eva Ready, Capital |
|
898,500 |
|
Eva Ready, Withdrawals |
104,000 |
|
|
Sales Revenue |
|
1,043,000 |
|
Sales Discount |
7,000 |
|
|
Sales Returns & Allowances |
5,500 |
|
|
Cost of Goods Sold |
403,000 |
|
|
Salaries Expense |
165,000 |
|
|
Insurance Expense |
|
|
|
Utilities Expense |
87,500 |
|
|
Rent Expense |
126,000 |
|
|
Depreciation Expense – Furniture & Fixtures |
|
|
|
Depreciation Expense – Computer Equipment |
|
|
|
Store Supplies Expense |
|
|
|
Gain on Disposal of Old Computer Equipment |
|
14,000 |
|
Bad-Debt Expense |
|
|
|
Interest Expense |
_ 27,000 |
________ |
|
Total |
2,826,500 |
2,826,500 |
The following additional information is available at June 30, 2020:
- Store Supplies on hand at June 30, 2020 amounted to $25,000.
- Insurance of $72,000 was paid on May 1, 2020 for the 6-months to October 31, 2020
- Rent was paid on March 31, 2020 for the 4-months to July 31, 2020.
- The furniture and fixtures have an estimated useful life of 10 years and is being
depreciated on the straight-line method down to a residual value of $160,000. - The computer equipment was acquired on March 31, 2020 and is being depreciated
over 5 years on the double-declining balance method of depreciation, down to
a residue of $30,000
- Salaries earned by employees not yet paid amounted to $14,000 at June 30, 2020.
- Accrued interest expense as of June 30, 2020, $9,000.
- At June 30, 2020, $48,000 of the previously unearned sales revenue had been earned
- The aging of the Accounts Receivable schedule at June 30, 2020 indicated that the
Allowance for
- After making all other adjustments, a physical count of inventory was done, which
reveals that there was $186,000 worth of inventory on hand at June 30,2020
Other data:
(xi) The business is expected to make principal payments totalling $90,000 towards the
loan during the fiscal year to June 30 ,2021
Required:
- Prepare the necessary
adjusting journal entries on June 30, 2020.
[Narrations are not required]
- Prepare the Adjusted Trial balance for the period ending June 30, 2020.
- Using the Adjusted trial balance, generate the statements requested by MNB, i.e.
- A Multiple-step income statement & a Statement of owner’s equity for the year ended June 30, 2020
- d) A Classified
balance sheet , in report format, at June 30, 2020.
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