Concept explainers
Pass the
Explanation of Solution
Adjusting entries: Adjusting entries are those entries which are recorded at the end of the year, to update the income statement accounts (revenue and expenses) and balance sheet accounts (assets, liabilities, and
Pass the adjusting entry for the given transaction:
General Journal | Page -18 | |||
Date | Description | Post Ref. | Debit | Credit |
2019 | ||||
December 31 | Income Summary | $9,700 | ||
Merchandise Inventory | $9,700 | |||
(To record the beginning inventory) | ||||
December 31 | Merchandise Inventory | $10,800 | ||
Income Summary | $10,800 | |||
(To record the closing inventory) | ||||
December 31 | Unearned Seminar Fees (1) | $13,500 | ||
Seminar Fees Income | $13,500 | |||
(To record the unearned revenue) | ||||
December 31 | Insurance expense (2) | $6,000 | ||
Prepaid Insurance | $6,000 | |||
(To record the prepaid insurance) | ||||
December 31 | $760 | |||
$760 | ||||
(To record the depreciation on equipment) |
Table (1)
General Journal | Page - 18 | |||
Date | Description | Post Ref. | Debit | Credit |
2019 | ||||
December 31 | Wage Expense | $1,000 | ||
Wages Payable | $1,000 | |||
(To record the wages payable) | ||||
December 31 | Payroll Taxes Expense | $112.50 | ||
Federal | $6.00 | |||
State Unemployment Tax Payable | $30.00 | |||
Social Security Tax Payable | $14.50 | |||
Medicare Tax Payable | $62.00 | |||
(To record the taxes on accrued wages) | ||||
December 31 | Uncollectible Accounts Expense (4) | $45,000 | ||
Allowance for Doubtful accounts | $45,000 | |||
(To record the uncollectible account) | ||||
December 31 | Rent expense (5) | $4,500 | ||
Prepaid Rent | $4,500 | |||
(To record the prepaid rent) | ||||
December 31 | Supplies Expense (6) | $450 | ||
Supplies | $450 | |||
(To record the supplies) | ||||
December 31 | Interest expense (7) | $100 | ||
Interest Payable | $100 | |||
(To record the interest payable) |
Table (2)
Working note (1):
Calculate the Unearned Seminar Fees:
Working note (2):
Calculate the Insurance expense:
Working note (3):
Calculate the Depreciation Expense - Store Equipment:
Working note (4):
Calculate the Uncollectible Accounts Expense:
Working note (5):
Calculate the Rent expense:
Working note (6):
Calculate the Supplies Expense:
Working note (7):
Calculate the Interest expense:
Calculate the balance amount in the unearned seminar fees.
The balance of the unearned seminar fees would be $4,500
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Chapter 12 Solutions
COLLEGE ACCOUNTING (LL)W/ACCESS>CUSTOM<
- On December 31, 2019, the balances of the accounts appearing in the ledger of Wyman Company are as follows: Instructions 1. Does Wyman Company use a periodic or perpetual inventory system? Explain. 2. Prepare a multiple-step income statement for Wyman Company for the year ended December 31, 2019. The merchandise inventory as of December 31, 2019, was 305,000. The adjustment for estimated returns inventory for sales for the year ending December 31, 2019, was 30,000. 3. Prepare the closing entries for Wyman Company as of December 31, 2019. 4. What would the net income have been if the perpetual inventory system had been used?arrow_forwardPalisade Creek Co. is a merchandising business that uses the perpetual inventory system. The account balances for Palisade Creek Co. as of May 1, 2019 (unless otherwise indicated), are as follows: During May, the last month of the fiscal year, the following transactions were completed: Instructions 1. Enter the balances of each of the accounts in the appropriate balance column of a four-column account. Write Balance in the item section and place a check mark () in the Posting Reference column. Journalize the transactions for May, starting on Page 20 of the journal. 2. Post the journal to the general ledger, extending the month-end balances to the appropriate balance columns after all posting is completed. In this problem, you are not required to update or post to the accounts receivable and accounts payable subsidiary ledgers. 3. Prepare an unadjusted trial balance. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete (5) and (6). 5. (Optional) Enter the unadjusted trial balance on a 10-column end-of-period spreadsheet (work sheet), and complete the spreadsheet. 6. Journalize and post the adjusting entries. Record the adjusting entries on Page 22 of the journal. 7. Prepare an adjusted trial balance. 8. Prepare an income statement, a statement of owners equity, and a balance sheet. 9. Prepare and post the closing entries. Record the closing entries on Page 23 of the journal. Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. Insert the new balance in the owners capital account. 10. Prepare a post-closing trial balance.arrow_forwardA firm is preparing to make adjusting entries at the end of the accounting period. The balance of the merchandise inventory account is 200,000. If the firm is using the periodic inventory system, what does this balance represent?arrow_forward
- Basga Company uses the periodic inventory system. Beginning inventory amounted to 241,072. A physical count reveals that the latest inventory amount is 256,339. Record the adjusting entries, using T accounts.arrow_forwardJohn Neff owns and operates Waikiki Surf Shop. A year-end trial balance is provided on page 561. Year-end adjustment data for the Waikiki Surf Shop are shown below. Neff uses the periodic inventory system. Year-end adjustment data are as follows: (a, b)A physical count shows that merchandise inventory costing 51,800 is on hand as of December 31, 20--. (c, d, e)Neff estimates that customers will be granted 2,000 in refunds of this years sales next year and the merchandise expected to be returned will have a cost of 1,200. (f)Supplies remaining at the end of the year, 600. (g)Unexpired insurance on December 31, 2,600. (h)Depreciation expense on the building for 20--, 5,000. (i)Depreciation expense on the store equipment for 20--, 3,000. (j)Wages earned but not paid as of December 31, 1,800. (k)Neff also offers boat rentals which clients pay for in advance. Unearned boat rental revenue as of December 31 is 3,000. Required 1. Prepare a year-end spreadsheet. 2. Journalize the adjusting entries. 3. Compute cost of goods sold using the spreadsheet prepared for part (1).arrow_forwardPalisade Creek Co. is a retail business that uses the perpetual inventory system. The account balances for Palisade Creek as of May 1, 20Y6 (unless otherwise indicated), are as follows: During May, the last month of the fiscal year, the following transactions were completed: Record the following transactions on Page 21 of the journal: Instructions 1. Enter the balances of each of the accounts in the appropriate balance column of a four-column account. Write Balance in the item section, and place a check mark () in the Posting Reference column. Journalize the transactions for May, starting on Page 20 of the journal. 2. Post the journal to the general ledger, extending the month-end balances to the appropriate balance columns after all posting is completed. In this problem, you are not required to update or post to the accounts receivable and accounts payable subsidiary ledgers. 3. Prepare an unadjusted trial balance. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete (5) and (6). 5. (Optional) Enter the unadjusted trial balance on a 10-column end-of-period spreadsheet (work sheet), and complete the spreadsheet. 6. Journalize and post the adjusting entries. Record the adjusting entries on Page 22 of the journal. 7. Prepare an adjusted trial balance. 8. Prepare an income statement, a statement of stockholders equity, and a balance sheet. Assume that additional common stock of 10,000 was issued in January 20Y6. 9. Prepare and post the closing entries. Record the closing entries on Page 23 of the journal. Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. Insert the new balance in the retained earnings account. 10. Prepare a post-closing trial balance.arrow_forward
- Castle Furnishings Company’s perpetual inventory records indicate that $675,400 of merchandise should be on hand on November 30, 2019. The physical inventory indicates that $663,800 of merchandise is actually on hand. Journalize the adjusting entry for the inventory shrinkage for Castle Furnishings Company for the year ended November 30, 2019. Assume that the inventory shrinkage is a normal amount.arrow_forwardChloe Company employs the perpetual inventory system. Cost of Goods Sold for the year before any adjustment is $275,450. The computer record shows the amount of ending inventory to be $55,382, while the physical count shows ending inventory to be $51,405. Record the adjustment into T accounts and then journalize the adjusting entry.arrow_forwardgeneral journal Required: Based on the information above, record the adjusting journal entries that must be made for Ambriz Distributors on June 30, 20X1. The company has a June 30 fiscal year-end. a.–b. Merchandise Inventory, before adjustment, has a balance of $6,800. The newly counted inventory balance is $7,300. c. Unearned Seminar Fees has a balance of $5,300, representing prepayment by customers for five seminars to be conducted in June, July, and August 20X1. Two seminars had been conducted by June 30, 20X1. d. Prepaid Insurance has a balance of $7,800 for six months’ insurance paid in advance on May 1, 20X1. e. Store equipment costing $17,710 was purchased on March 31, 20X1. It has a salvage value of $430 and a useful life of six years. f. Employees have earned $180 that has not been paid at June 30, 20X1. g. The employer owes the following taxes on wages not paid at June 30, 20X1: SUTA, $5.40; FUTA, $1.08; Medicare, $2.61; and social security, $11.16. h. Management estimates…arrow_forward
- Palisade Creek Co. is a merchandising business that uses the perpetual inventory system.The account balances for Palisade Creek Co. as of May 1, 2019 (unless otherwise indicated), are as follows: During May, the last month of the fiscal year, the following transactions were completed:May 1. Paid rent for May, $5,000.3. Purchased merchandise on account from Martin Co., terms 2/10, n/30, FOB shipping point, $36,000.4. Paid freight on purchase of May 3, $600.6. Sold merchandise on account to Korman Co., terms 2/10, n/30, FOB shipping point, $68,500. The cost of the merchandise sold was $41,000.7. Received $22,300 cash from Halstad Co. on account.10. Sold merchandise for cash, $54,000. The cost of the merchandise sold was $32,000.13. Paid for merchandise purchased on May 3.15. Paid advertising expense for last half of May, $11,000.16. Received cash from sale of May 6.19. Purchased merchandise for cash, $18,700.19. Paid $33,450 to Buttons Co. on account.20. Paid Korman Co. a cash refund…arrow_forwardHenderson Co.'s perpetual inventory records indicate that $382,800 of merchandise should be on hand on March 31, 2020. The physical inventory indicates that $371,000 of merchandise is actually on hand. Journalize the adjusting entry for the inventory shrinkage for Acct 201 Co. for the year ended March 31, 2020. Indicate Dr. or Cr. in front of each account.arrow_forwardFuque Ltd. uses the retail inventory method to estimate ending inventory for its monthly financial statements. The following data pertain to a single department for the month of October 2019. Instructionsa. Using the conventional retail method, prepare a schedule computing estimated LCNRV inventory for October 31, 2019.arrow_forward
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