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 1. Journalize the closing entries
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
|
|
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
1. Journalize the closing entries
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