You have just joined Queenie Limited, which is a small merchandising company, as anaccountant. Queenie Limited was set up on January 1, 2020.You have recently asked the bookkeeper to prepare the draft of the financial statements for thefirst year of operations ended December 31, 2020 for your review.The bookkeeper said that she only knew how to prepare a trial balance and below was the trialbalance submitted by the bookkeeper.Queenie LimitedTrial BalanceDecember 31, 2020DRCR2$$TruckOffice equipmentCash280,950102,00030,750Share capitalSales revenue received240,000577,080Salaries paidUtilities paidRent paidInsurance paid181,50012,000195,00014,880817,080817,080In discussing the trial balance with the bookkeeper, you asked whether adjusting entries havebeen prepared to get the accounts up to date for the trial balance. The bookkeeper said thatthere was no need to make adjusting entries as Queenie Limited was a small company.Required:Explain why the accountant suspected that the accounts had not been adjusted prior to theа.preparation of the trial balance.b.Explain to the bookkeeper the importance of adjusting entries and the potentialmisstatements that can result from their exclusion.

Trail balance is the statement which is prepared with the aim and purpose to check that the posting…

Explain why the accountant suspected that the accounts had not been adjusted prior to the preparation of the trial balance. Explain to the bookkeeper the importance of adjusting entries and the potential misstatements that can result from their exclusion.

Explain why the accountant suspected that the accounts had not been adjusted prior to the preparation of the trial balance. Explain to the bookkeeper the importance of adjusting entries and the potential misstatements that can result from their exclusion.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

You have just joined Queenie Limited, which is a small merchandising company, as an
accountant. Queenie Limited was set up on January 1, 2020.
You have recently asked the bookkeeper to prepare the draft of the financial statements for the
first year of operations ended December 31, 2020 for your review.
The bookkeeper said that she only knew how to prepare a trial balance and below was the trial
balance submitted by the bookkeeper.
Queenie Limited
Trial Balance
December 31, 2020
DR
CR
2$
$
Truck
Office equipment
Cash
280,950
102,000
30,750
Share capital
Sales revenue received
240,000
577,080
Salaries paid
Utilities paid
Rent paid
Insurance paid
181,500
12,000
195,000
14,880
817,080
817,080
In discussing the trial balance with the bookkeeper, you asked whether adjusting entries have
been prepared to get the accounts up to date for the trial balance. The bookkeeper said that
there was no need to make adjusting entries as Queenie Limited was a small company.
Required:
Explain why the accountant suspected that the accounts had not been adjusted prior to the
а.
preparation of the trial balance.
b.
Explain to the bookkeeper the importance of adjusting entries and the potential
misstatements that can result from their exclusion.

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