Question

accounting paper

RADEON Exercise - Adjusting journal entries The Sentry Inc.'s general ledger shows on March 31, 2019 the following balances of the selected accounts: Cash €5,000; Prepaid Insurance €7,200; Accounts receivable €37,000; Allowance for doubtful accounts €200; Note receivable €60,000; Supplies €5,600; Prepaid Insurance €7,200; Cars €70,000; Accumulated Depreciation, Cars €24,000; Notes Payable €20,000; Uneamed Subscription Revenue €18,600; Shareholders' Equity, Common stock €30,000; Subscription Revenue €120,000; Wages and Salaries Expense €28,000 Summarize them in the trial balance (not completed yet), before adjustment entries: (see in the Trial Balance bellow). The following information is available: a) The cars depreciate €500 a month. b) Interest of €600 is accrued on notes payable. c) Three-quarters of unearned revenue was earned during the quarter. d) Interest of €1000 is accrued on notes receivable. e) Insurance expires at the rate of €600 per month. ) Supplies on hand amounted to total €1700. 9) Bad debt expense estimated 2% from net sales. (Bad Debt Expense, Allowance for Uncollectible Accounts) Instructions: a) Why are there certain accounts open without the beginning balance in the Trial balance? b) Prepare adjusting entries, assuming they are made quarterly, or fill in missing data. Omit explanation c) Complete TB columns Solution: Partial TB Unadjusted TB Adjustments Adjusted TB

Answer 1

a) Why there are certain accounts open without beginning balance in the Trial Balance ?

Accounts which is used for accounting income and expense, their balance at period end is transferred to income summary statement and hence such GLs do not have beginning balance in Trail balance. The accounts which are used first time during the period may also not have beginning balance

b) Prepare adjusting entries assuming they are made on quarterly, or fill in missing data omit explanation

Account	Debit	Credit
Depreciation car	1,500.00
Accumulated depreciation car		1,500.00
(To record depreciation for quarter)
Interest Expense on Notes Payable	600.00
Interest payable on Notes		600.00
(To record accrued interest on notes payable
Unearned subscription revenue	18,600.00
Subscription revenue		18,600.00
(To record recognition of unearned subscription revenue)
Interest Receivable on Notes	1,000.00
Interest Income on Notes Receivable		1,000.00
(To record accrued interest on notes receivable)
Insurance Expenses	1,800.00
Prepaid Insurance		1,800.00
(To record insurance expense of quarter from prepaid)
Supplies Expense	3,900.00
Supplies		3,900.00
(To record consumption of supplies)
Allowance for doubtful accounts expense	2,772.00
Allowance for doubtful accounts		2,772.00
(To record allowance required for the year)

C Complete the TB Columns :

Accounts	Unadjusted TB	Adjustment	Adjusted TB	dr/cr
Cash	5,000.00		5,000.00	dr
Prepaid Insurance	7,200.00	(1,800.00)	5,400.00	dr
Account Receivable	37,000.00		37,000.00	dr
Allowance for doubtful accounts	200.00	2,772.00	2,972.00	cr
Note receivable	60,000.00		60,000.00	dr
Supplies	5,600.00	(3,900.00)	1,700.00	dr
Cars	70,000.00		70,000.00	dr
Accumulated depreciation car	24,000.00	1,500.00	25,500.00	cr
Notes Payable	20,000.00		20,000.00	cr
Unearned subscription revenue	18,600.00	(18,600.00)	-	cr
Common Stock	30,000.00		30,000.00	cr
Subscription revenue	120,000.00	18,600.00	138,600.00	cr
Wages & Salaries Expenses	28,000.00		28,000.00	dr
Depreciation car		1,500.00	1,500.00	dr
Interest Expense on Notes Payable		600.00	600.00	dr
Interest payable on Notes		600.00	600.00	cr
Interest Income on Notes Receivable		1,000.00	1,000.00	cr
Interest Receivable on Notes		1,000.00	1,000.00	dr
Insurance Expesnes		1,800.00	1,800.00	dr
Supplies Expense		3,900.00	3,900.00	dr
Allowance for doubtful accounts expense		2,772.00	2,772.00	dr
			218,672.00	dr
			218,672.00	cr