Trial Balance as at June 30, 2020       Dr $       Cr $ Cash 127,000   Accounts Receivable 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   Accumulated Depreciation: Furniture & Fixtures   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 Bad Debts should be $19,500 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 Question 1: Prepare the necessary adjusting journal entries on June 30, 2020.

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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Trial Balance as at June 30, 2020

 

    Dr $

      Cr $

Cash

127,000

 

Accounts Receivable

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

 

Accumulated Depreciation: Furniture & Fixtures

 

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 Bad Debts should be $19,500

  • 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

Question 1:

Prepare the necessary adjusting journal entries on June 30, 2020.

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