JKL Enterprise reported the following trial balance for year ending December 31,
ID: 2550625 • Letter: J
Question
JKL Enterprise reported the following trial balance for year ending December 31,2017
30,000
Notes indicate that:
Bookkeeper was instructed to charge all checks written to the appropriate expense. Accountants will do all adjusting, accruals and deferrals.
Of the note receivable, 30,000 was a 10 year all interest payable at end of ten years loan to the vice-president of the company. Interest 2%. Loan was made on January 2, 2017
The balance of the note receivable was to a customer to upgrade their facility so they could use more of what JKL produced. Loan was July 1, 2017, 6%with $10,000 and all accrued interest to be paid June 20,2018,June 30 2019,June 30 2020.
Depreciation for 2017 was 25,000.
Insurance was for a three year policy beginning July 1 2017.
Salaries included a 20,000 salary advance to an executive, to be repaid by withholding 500 from his weekly salary until repaid. No interest payable.
Prepare adjusting balance sheet and income statement.
Cash 45,000 Accounts receivable 15,000 Inventory 20,000 Note receivable 60,000 Interest receivable Plant, property and equipment 1,125,000 Accumulate depreciation 800,000 Land 700,000 Note payable 180,000 Interest payable 15,000 Common stock 2,000 Retained earning 878,000 Sales revenue 1,200,000 Cost of goods sold 960,000 Salaries 120,000 Insurance30,000
Explanation / Answer
Adjusting entries 1 Interest receivable 600 (30000*2%) Interest revenue 600 2 Interest receivable 300 (10000*6%*6/12) Interest revenue 300 3 Depreciation expense 25000 Accumulated depreciation 25000 4 Insurance expense 5000 (30000*6/36) Insurance 5000 5 Advance salaries 20000 Salaries 20000 Income statement Sales revenue 1200000 Interest revenue 900 Total revenue 1200900 Less Expense Cost of goods sold 960000 Salaries 100000 Insurance expense 5000 Depreciation expense 25000 Total expense 1090000 Net income 110900 Balance sheet Assets Current asset Cash 45000 Accounts receivable 15000 Interest receivable 900 Advance salaries 20000 Insurance 25000 Inventory 20000 Total current assets 125900 Notes receivable 60000 Plant property and equipment 1125000 Accumulated depreciation -825000 Land 700000 1060000 Total assets 1185900 Liabilities and stockholders equity Liabilities Notes payable 180000 Interest payable 15000 Total liabilities 195000 Stockholders equity Common stock 2000 Retained earnings 878000+110900 988900 Total stockholders equity 990900 Total liabilities and stockholders equity 1185900
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