Question

1. Using the following additional information, enter the adjustments into the work sheet with the help of unadjusted trial balance given below: (10 marks)

		Unadjusted Trial Balance
No.	Account	Debit	Credit
101	Cash	9,100
106	Accounts receivable	18,700
111	Notes receivable, due February 2015	16,000
128	Prepaid insurance	5,100
161	Furniture	6,750
201	Accounts payable		6,925
230	Unearned tour revenue		12,430
301	Jan Rider, capital		60,975
302	Jan Rider, withdrawals	-0-
403	Tour revenue		16,700
623	Wages expense	41,380
	Totals	97,030	97,030

1. Interest of $40 had accrued on the note receivable by month-end.
2. The July utility bill for $175 was received in the mail on July 31. It is unpaid and unrecorded.
3. Depreciation on the furniture for the month of July is $210.
4. The balance in Prepaid Insurance is from a six-month policy that went into effect on July 1, 2014.
5. The company has two part-time employees, each of whom gets paid $315 every Friday for a five-day part-time workweek. July 31 falls on a Tuesday, therefore two days of accrued wages need to be recorded.
6. At July 31, it was determined that $4,900 of the balance in Unearned Tour Revenue was not yet earned.
7. Accrued tour revenue of $1,600 was unrecorded and uncollected at July 31.

Prepare a ten column worksheet, enter unadjusted trial balance and complete it.

Prepare a ten column worksheet, enter unadjusted trial balance and complete it. Account Titles Adjustments Unadjusted Trial Balance Adjusted Trial Balance Income Statement Balance Sheet & St. of Owner's Equity Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.

Answer 1

Preparing the Worksheet:-

Worksheet

July 31,2014

Accounts	Unadjusted	Trial Balance	Adjusting	Entries	Adjusted	Trial Balance	Income	Statement	Balance	Sheet
	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit
Cash	$9,100				$9,100				$9,100
Accounts Receivable	18,700		$1,600		20,300				20,300
Notes Receivable, Due February 2015	16,000				16,000				16,000
Prepaid Insurance	5,100			$850	4,250				4,250
Furniture	6,750				6,750				6,750
Accumulated Depreciation, Furniture		$0		210		$210				$210
Accounts Payable		6,925				6,925				6,925
Interest Payable		0		40		40				40
Utilities Payable		0		175		175				175
Wages Payable		0		252		252				252
Unearned Tour Revenue		12,430	7,530			4,900				4,900
Jan Rider, Capital		60,975				60,975				60,975
Jan Rider, Withdrawals	0				0				0
Tour Revenue		16,700		9,130		25,830		$25,830
Wages Expense	41,380		252		41,632		$41,632
Interest Expense	0		40		40		40
Utilities Expense	0		175		175		175
Depreciation Expense	0		210		210		210
Insurance Expense	0		850		850		850
Totals	$97,030	$97,030	$10,657	$10,657	$99,307	$99,307	$42,907	$25,830	$56,400	$73,477
						Net Loss	$(17,077)			$(17,077)
						Totals	$25,830	$25,830	$56,400	$56,400

General Journal (Adjusting Entries)

July 31,2014

Date	Accounts Title	Debit	Credit
July 31 (a)	Interest Expense	$40
	Interest Payable		$40
(b)	Utilities Expense	$175
	Utilities Payable		$175
(c)	Depreciation Expense	$210
	Accumulated Depreciation, Furniture		$210
(d)	Insurance Expense	$850
	Prepaid Insurance		$850
(e)	Wages Expense	$252
	Wages Payable		$252
(f)	Unearned Tour Revenue	$7,530
	Tour Revenue		$7,530
(g)	Accounts Receivable	$1,600
	Tour Revenue		$1,600

Working Notes:-

d. Calculations for Insurance Expense for one month:-

$5,100 of Prepaid Insurance for six months, so Insurance Expense for Month of July is:-

Insurance Expense=($5,100×1/6)

=$850

e. Calculations for Wages Expense for two days for two employees when wages paid of $315 per employee for Five Days:-

Wages Expense=($315×2)×2/5

=($630×2/5)

=$252

f. At July 31, the Balance of $4,900 of Unearned Tour Revenue was not earned, which means $7,530 ($12,430-$4,900) Earned, so Debited Unearned Tour Revenue and Credited Tour Revenue with $7,530.

g. Accrued Tour Revenue was not recorded, so Debited Accounts Receivable and Credited Tour Revenue with $1,600.