Unadjusted Trial Balance At December 31, 20XX Acc. # Account Name Debits Credits
ID: 2510078 • Letter: U
Question
Unadjusted Trial Balance
At December 31, 20XX
Acc. #
Account Name
Debits
Credits
100
Cash
$ 66,000
110
Accounts receivable
160,000
115
Allowance for doubtful accounts
$ 7,000
120
Inventory
50,000
135
Prepaid insurance
27,000
136
Prepaid advertising
-
150
Land
235,000
160
Building
240,000
165
Accumulated depreciation - building
54,000
170
Equipment
150,000
175
Accumulated depreciation - equipment
41,250
190
Notes receivable
155,000
195
Interest receivable
-
200
Accounts payable
135,000
215
Interest payable
-
219
Income tax payable
-
230
Accrued liabilities
32,000
240
Unearned revenue
65,000
250
Notes payable - current portion
-
255
Notes payable - long-term portion
100,000
270
Bonds payable
100,000
300
Common stock
500,000
310
Retained earnings
21,000
350
Dividends
5,000
400
Sales
1,309,750
450
Interest revenue
86,000
500
Cost of goods sold
616,000
510
Administrative and general expenses
97,000
515
Insurance expense
-
520
Selling expenses
194,000
531
Depreciation expense - building
-
532
Depreciation expense - equipment
-
550
Interest expense
60,000
599
Income tax expense
-
600
Loss on sale of equipment
60,000
910
Loss from operation of discontinued
75,000
segment of business
915
Loss from disposal of discontinued
261,000
segment of business
$ 2,451,000
$ 2,451,000
The single compound journal entry for annual depreciation of building and equipment needs to be recorded. All buildings and equipment owned by the company are depreciated according to the straight-line method of depreciation. Kurek Corporation never assigns residual values to its buildings or equipment, and buildings are depreciated over 20 years and equipment is depreciated over 16 years.
When reviewing the unadjusted trial balance as part of the review for needed prepayment (deferral) adjusting journal entries, it was determined that $55,500 of the services for which the $65,000 unearned revenue item was initially recorded have since been performed.
The work performed on the unearned revenue item referenced in journal entry #2 reminded the CFO of Kurek Corporation that a deposit of $60,000 was received on April 1, 20XX for 12 monthly deliveries set to begin on April 15, 20XX and taking place on the 15th of each of the subsequent months until the contract expired. When the cash payment was received on April 1, the following journal entry was recorded:
Db. Cash $60,000
Cr. Sales $60,000
The prepaid insurance item in the unadjusted trial balance was recorded when a $27,000 cash payment was made on September 1, 20XX for insurance services to be received over the period of September 1, 20XX through August 31, 20X1.
On December 1, 20XX a $20,000 cash payment was made to Comcast Cable Co. for 5 television-commercial-spots that were to air over the course of the next two months. 3 of the 5 spots paid for were aired during December. On December 1, when the cash payment was made, the following journal entry was recorded:
Db. Selling expenses $20,000
Cr. Cash $20,000
Unpaid and unrecorded interest charges on the bonds and notes payable amount to $7,500.
The $155,000 notes receivable was issued and recorded on June 1, 20XX. The note is a two year note with a stated interest rate of 12.0%. All interest will be received on the date of maturity along with the repayment of the principle. None of the interest pertaining to this note has yet been recorded during 20XX.
The $100,000 notes payable currently recorded entirely as long-term is being paid off in five equal $20,000 installments occurring annually on October 1. As a result, a portion of this $100,000 needs to be reclassified as short-term, since some of it is due within the next twelve months.
After completing the income statement for the year it was determined that the income tax effect for the year was a “net” $17,352 (“net” makes reference to the fact that there are multiple income tax items embedded within the income statement as a result of certain “net of tax” items). The income tax payment to the government will be made on March 15, 20X1.
General Journal
J1
Entry #
Date
Account Names
Ref.
Debit
Credit
1
To record annual depreciation on building and equipment
2
To record service rendered to a customer that originally paid cash in advance of service
3
To eliminate from sales the remainder of a deposit for which no services have yet been rendered
4
To record portion of insurance prepayment that relates to services received
5
To record portion of advertising charges for which service has yet been received
6
To record interest charges on notes and bonds payable
7
To record interest associated with note receivable
8
To reclassify current portion of notes payable out of long-term balance
9
To record current year income tax effect
Unadjusted Trial Balance
At December 31, 20XX
Acc. #
Account Name
Debits
Credits
100
Cash
$ 66,000
110
Accounts receivable
160,000
115
Allowance for doubtful accounts
$ 7,000
120
Inventory
50,000
135
Prepaid insurance
27,000
136
Prepaid advertising
-
150
Land
235,000
160
Building
240,000
165
Accumulated depreciation - building
54,000
170
Equipment
150,000
175
Accumulated depreciation - equipment
41,250
190
Notes receivable
155,000
195
Interest receivable
-
200
Accounts payable
135,000
215
Interest payable
-
219
Income tax payable
-
230
Accrued liabilities
32,000
240
Unearned revenue
65,000
250
Notes payable - current portion
-
255
Notes payable - long-term portion
100,000
270
Bonds payable
100,000
300
Common stock
500,000
310
Retained earnings
21,000
350
Dividends
5,000
400
Sales
1,309,750
450
Interest revenue
86,000
500
Cost of goods sold
616,000
510
Administrative and general expenses
97,000
515
Insurance expense
-
520
Selling expenses
194,000
531
Depreciation expense - building
-
532
Depreciation expense - equipment
-
550
Interest expense
60,000
599
Income tax expense
-
600
Loss on sale of equipment
60,000
910
Loss from operation of discontinued
75,000
segment of business
915
Loss from disposal of discontinued
261,000
segment of business
$ 2,451,000
$ 2,451,000
Explanation / Answer
Sr. No
Date
Account name
Ref
Debit
Credit
1
31 Dec 20xx
Depreciation expense
To Accumulated Depreciation (building) (240000/12)
12,000
To Accumulated depreciation (equipment) (150000/16)
9,375
To record annual depreciation on building and equipment
2
31 Dec 20xx
Unearned revenue
55,500
Sales
55,500
To record service rendered to a customer that originally paid cash in advance of service
3
31 Dec 20xx
Sales
15,000
Unearned revenue
15,000
To eliminate from sales the remainder of a deposit for which no services have yet been rendered
4
Insurance expense
6,750
Prepaid insurance
6,750
To record portion of insurance prepayment that relates to services received
5
Prepaid expenses
8,000
Selling expenses
8,000
To record portion of advertising charges for which service has yet been received
6
Interest expense
7,500
Interest payable
7,500
To record interest charges on notes and bonds payable
7
Interest receivable
10,850
Interest revenue
10,850
To record interest associated with note receivable
8
Notes payable - long-term portion
20,000
Notes payable - current portion
20,000
To reclassify current portion of notes payable out of long-term balance
9
Income tax expense
17,352
Income tax payable
17,352
To record current year income tax effect
Sr. No
Date
Account name
Ref
Debit
Credit
1
31 Dec 20xx
Depreciation expense
To Accumulated Depreciation (building) (240000/12)
12,000
To Accumulated depreciation (equipment) (150000/16)
9,375
To record annual depreciation on building and equipment
2
31 Dec 20xx
Unearned revenue
55,500
Sales
55,500
To record service rendered to a customer that originally paid cash in advance of service
3
31 Dec 20xx
Sales
15,000
Unearned revenue
15,000
To eliminate from sales the remainder of a deposit for which no services have yet been rendered
4
Insurance expense
6,750
Prepaid insurance
6,750
To record portion of insurance prepayment that relates to services received
5
Prepaid expenses
8,000
Selling expenses
8,000
To record portion of advertising charges for which service has yet been received
6
Interest expense
7,500
Interest payable
7,500
To record interest charges on notes and bonds payable
7
Interest receivable
10,850
Interest revenue
10,850
To record interest associated with note receivable
8
Notes payable - long-term portion
20,000
Notes payable - current portion
20,000
To reclassify current portion of notes payable out of long-term balance
9
Income tax expense
17,352
Income tax payable
17,352
To record current year income tax effect
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