Question

Please make the year end adjustments in a worksheet and include and in a general journal

Cascade Bicycle Shop Trial Balance December 31, 20 -- ACCOUNT TITLE DEBIT BALANCE CREDIT BALANCE Cash Accounts Receivable Merchandise Inventory Supplies Prepaid Insurance Land Building Accumulated Depr. -Building Store Equipment Accumulated Depr.-Store Equip Accounts Payable Wages Payable Sales Tax Payable Unearned Storage Revenue Mortgage Payable D. Lamond, Capital 22,895 14,640 31,390 7,475 4,505 28,130 51,440 16,520 27,450 9,150 3,530 2,985 5,660 43,400 163,640

Answer 1

d). Unexpired Insurance Opening Prepaid Closing unexpired insurance Decrease in the value of the Prepaid Insurance (This result in the decrease in profit and is charged in Statement of Profit & loss Account) 4505 Journal Entry Insurance A/c (Ultimately P&L) Dr. 2,740 To Prepaid Insurance A/c 2,740 e). Depreciation & - Building 3,880 (Will be charged in Statement of Profit and loss account) Equipment Total charge to P& L Journal Entry 3,660 Depreciation A/c (Ultimately P&L) Dr. 7,540 Cr To Accumulated Depr. Equipment To Accumulated 3,660 880 Buildin Unearned storage revenue Opening Unearned Revenue Closing Unearned Revenue (See note) Decrease in the value of the storage revenue (It will be recognised as revenue in the P&L as the Liability has decreased) 5,660 10 Journal Entry Unearned Storage Revenue Dr. 3,710 To Storage Revenue (Trf. to P&L) (It will be recognised as Expense in the P&L as the Liability has has increased) 710 Note- the Question is using the language of "as of" rather than "as on" the question has been solved considering it "as on" will be the answer alternatively following Journal Entryy Storage Revenue (Creates -ive revenue) Dr. 1,950 To Unearned storage revenue This is creating the storage revenue in -ive, hence not considered. h). IWages outstanding as on 31st Dec Journal Entry Wages A/c Dr To Outstanding Wages A/c 76