The following information relates to Trees R Us Ltd, for the annual accounting p
ID: 2551028 • Letter: T
Question
The following information relates to Trees R Us Ltd, for the annual accounting period ending 30 June 2017: 1. The unadjusted trial balance shows Office Supplies with a normal balance of $3,500. An estimate of office supplies on hand at 30 June is $1,100. 2. The unadjusted trial balance shows Prepaid Rent with a normal debit balance of $5,200. Of this amount, only $400 has future economic benefit, specifically relating to July rent. 3. The Prepaid Insurance account has a debit balance of $4,140. It consists of the following policies purchased during the financial year ending 30 June 2017: Policy number Date of policy Zx 5432 ET 7890 CQA 3120 Premium paid 1 July 2016 1 October 2016 1 February 2017 Life of policy 2 years 1 year 6 months $2,880 720 540 4. Advertising Expense has a normal balance of $12,000. Included in this amount is $2,000 paid to the local newspaper for advertising space in their July and August 2017 papers. 5. The last payroll of $3,500 was paid on Friday, June 27, and represented five days of work. No workers worked on the weekend, and June 30 fell on a Monday, on which day all workers worked. The next payroll will be paid in July 6. At the end of the year, the business had outstanding a long-term loan of $20,000 with an interest rate of 7%. Interest only payments take place semi- annually, every 1 April and 1 October. The last interest payment made by the business was on 1 April 2017, representing interest owing for the previous six months. 7. The Services Revenue account has a normal balance of $72,000. Included in this amount is $4,300 for services to be provided in July 2017. 8. The Equipment account has a balance of $20,000, and the Accumulated Depreciation account a balance of $12,000. The equipment was six years old as of the beginning of the current financial year. The straight line method is used 9. The Motor Vehicle account has a balance of $50,000. The vehicle was purchased on 1 January 2017 and has an estimated useful life of 5 years. The straight line method is used. 10. No invoice has been received for property taxes, but it is estimated that the unpaid rates at 30 June 2017 were $3,400. Required: Prepare the adjusting journal entries required on 30 June 2017.Explanation / Answer
1.Supplies Expense Account Dr------ 2400
To Supplies Account Cr---------------2400
2.Preapid Rent Account Dr-----------400
To Rent Account Cr-------400
3.Prepaid Insurance PremiumAccount Dr-----4140
To Insurance premium Account Cr-----------4140
Insurance Premium Account Dr-----------4140
To Cash Account Cr-------------4140
4)Prepaid Advertising expenses Account Dr---------2000
To Advertising Expenses Cr--------------------------2000
5)Accrued Salary Account Dr----------3500
To Salary Payable Account Cr---------3500
It has become due but will be paid in July to workers.
6)Interest Receivable Account Dr------20000*7/100*6/12=7000
To Interest Revenue Account Cr--------7000
7)Unearned Revenue Account Dr---------4300
To Service Revenue Account Cr----------4300
8)Depriciation Expense Account Dr--------12000
To Accumulated Depriciation Account Cr----12000
9)
Depriciation Expense Account Dr--------5000
To Accumulated Depriciation Account Cr----5000
50000/5*6/12
10)Accrued Taxes Account Dr-------3400
To Taxes Account Cr------------------3400
Taxes has become due but not paid.
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