Problem 36: JKL Enterprise reported the following trial balance for year ending

Question

Problem 36: JKL Enterprise reported the following trial balance for year ending December 31, 2017. Cash Accounts Receivable Inventory Note Receivable Interest receivable Plant, Property and Equipment Accumulate Depreciation Land Note payable Interest payable Common Stock Retained earnings Sales Revenue Cost of goods sold Salaries Insurance 45,000 15,000 20,000 60,000 1,125,000 800,000 700,000 180,000 15,000 2,000 878.000 1,200,000 960,000 120,000 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 notes receivable, 30,000 was a 10 year all interest payable at end of ten years loan to the vice-president of the company. In erest 296, 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 30, 2018, June 30, 2019 and 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 entries, balance sheet and income statement.

Explanation / Answer

Adjusting Entries: Date Accounts Titles debit $ credit $ Dec 31 2017 Interest receivable 600 Interest revenues 600 Dec 31 2017 Interest receivable 300 Interest revenues 300 Dec 31 2017 Depreciation 25000 acc. Dep 25000 Dec 31 2017 Insurance prepaid 25000 Insurance exp 25000 Dec 31 2017 Advance salary 20000 Salary exp. 20000 Income Statement: Amount $ sales revenue 1200000 interest revenue 900 total revenue 1200900 Less:COGS 960000 GP 240900 Less: Expenses: Salaries 100000 Insurance 5000 Depre 25000 Total expeses 130000 Net Income 110900 Balance Sheet: Assets Amount$ Cash 45000 AR 15000 Inventory 20000 Interest Receivable 900 Insurance prepaid 25000 Salary advance 20000 NR 60000 PPE 1125000 Accum Dep -825000 land 700000 total assets 1185900 Liabilities: Amount$ NP 180000 IP 15000 CS 2000 RE 988900 Total Liabilities 1185900

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