Question

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Application Problem 3-15B a-d Eric Shehan is a student working on an internship at Mahon Ltd. On December 31, 2020, the company had its year end. Eric's boss brought him the following information: Accounts Payable Cash Notes Payable Inventory Common Shares Sales Revenue Retained Earnings (at January 1, 2020) Cost of Goods Sold Utilities Expense Interest Revenue Accounts Receivable Interest Expense $219,000 Wages Expense 116,000 Notes Receivable 248,000 Rent Expense 312,000 Dividends Declared 350,000 Supplies 3,405,000 Insurance Expense 1,149,000 Equipment 2,044,000 Accumulated Depreciation, Equipment 86,000 Miscellaneous Expense 10,000 Unearned Revenue 426,000 Advertising Expense 6,000 $364,000 198,000 32,000 178,000 11,000 16,000 1,695,000 161,000 32,000 28,000 54,000 These account amounts are correct, but Eric's boss advised him that the information did not reflect the following information: 1. 2. 4. 5. 6. 7. Accrued interest of $5,000 on the notes receivable. Employees earned $79,000 in bonuses based on achieving sales targets. These are payable on January 10, 2021. est on the note payable amounting to $5,000 is due in January 2021. As of December 31, 2020, the supplies still on hand had a cost of $7,000. The insurance expense includes $3,000 in premiums related to coverage for 2021. Depreciation for 2020 is $169,000 on the equipment. The company's board declared additional dividends of $250,000, which are payable to shareholders on January 15, 2021. Determine the amounts that would appear in an adjusted trial balance for Mahon Ltd. as at December 31, 2020.

Answer 1

ADJUSTED TRIAL BALANCE:
Acc Title	Unadjusted T/B		Adjustments		Adjusted T/B
	Debit $	Credit $	Debit $	Credit $	Debit $	Credit $
Cash	116000				116000
Acc Recei.	426000				426000
Inventory	312000				312000
Notes receivable	198000				198000
Supplies	11000			4000	7000
Int recei.			5000		5000
Prepaid Ins.			3000		3000
Equipment	1695000				1695000
Acc Dep- Eq.		161000		169000		330000
Acc payable		219000				219000
Notes payable		248000				248000
Unearned revenue		28000				28000
Interest payable				5000		5000
Bonus payable				79000		79000
Dividends payable				250000		250000
Com Shares		350000				350000
Ret Earnings		1149000				1149000
Dividends Declared	178000		250000		428000
Sales rev.		3405000				3405000
Interest revenue		10000		5000		15000
COGS	2044000				2044000
Utilities exp.	86000				86000
Interest exp.	6000		5000		11000
Wages exp.	364000				364000
Rent exp.	32000				32000
Insu. Exp.	16000			3000	13000
Advertising exp.	54000				54000
Misc. exp.	32000				32000
Bonus exp.			79000		79000
Supplies exp.			4000		4000
Dep exp.			169000		169000
Total	5570000	5570000	515000	515000	6078000	6078000
Income Statement:
	Amount $
Sales rev.	3405000
Interest revenue	15000
Total revenue	3420000
Less: expenses:
COGS	2044000
Utilities exp.	86000
Interest exp.	11000
Wages exp.	364000
Rent exp.	32000
Insu. Exp.	13000
Advertising exp.	54000
Misc. exp.	32000
Bonus exp.	79000
Supplies exp.	4000
Dep exp.	169000
Total expenses	2888000
Net Income	532000
add:Ret. Earn OB	1149000
less:Dividend declared	-428000
Retained Earnings CB	1253000
Balance Sheet:
Assets:	Amount $
Cash	116000
Account Receivable	426000
Inventory	312000
Notes receivable	198000
Supplies	7000
Interest receivable	5000
Prepaid Ins.	3000
Current assets	1067000
PPE:
Equipment	1695000
Accumulated Deprec.- Eq.	-330000
Total Assets	2432000
Liabilities & SH Eq.:	Amount $
Acc payable	219000
Notes payable	248000
Unearned revenue	28000
Interest payable	5000
Bonus payable	79000
Dividends payable	250000
Current Liabilities	829000
Stockholders' Equity:
Common Shares	350000
Ret Earnings	1253000
Total Liabitlities & SH Eq.	2432000