Question

Can you please explain each step.

The following is Wolastoq Tours Limited’s unadjusted trial balance at its year end, November 30, 2018. The company adjusts its accounts annually. Debit Credit Cash $17,800 Accounts receivable 8,040 Supplies 930 Prepaid rent 2,400 Prepaid insurance 10,920 Equipment 13,440 Accumulated depreciation—equipment $ 3,360 Vehicles 133,200 Accumulated depreciation—vehicles 44,400 Accounts payable 2,000 Unearned revenue 16,000 Bank loan payable, due 2021 50,400 Common shares 10,000 Retained earnings 27,225 Fees earned 134,904 Salaries expense 71,000 Repairs and maintenance expense 11,850 Rent expense 13,200 Interest expense 3,234 Advertising expense 825 Income tax expense 1,450 $288,289 $288,289 Additional information: 1. The insurance policy has a one-year term beginning April 1, 2018. At that time, a premium of $10,920 was paid. 2. The equipment was acquired on December 1, 2015, and has an estimated useful life of 8 years. The vehicles were acquired on December 1, 2015, and have an estimated useful life of 6 years. The company uses straight-line depreciation. 3. A physical count shows $300 of supplies on hand at November 30. 4. The bank loan payable has a 7% interest rate. Interest is paid on the first day of each following month, and was last paid on November 1. 5. Deposits of $1,600 each were received for advance tour reservations from 10 school groups. At November 30, all of these deposits have been earned. 6. Employees are owed a total of $700 at November 30. 7. A senior citizens’ organization that had not made an advance deposit took a river tour for $1,250. This group was not billed until December for the services performed. 8. Additional advertising costs of $280 have been incurred, but the bills have not been received by November 30. 9. On November 1, the company paid $2,400 rent in advance for November and December. 10. Income tax payable for the year is estimated to be an additional $600 beyond that recorded to date.

Prepare the adjusting journal entries required at November 30.

Answer 1

Credit Debit $ 7,280 10920*8/12 (Insurance is calculated upto Nov) $ 7,280 $ 1,540 13440/8*11/12 (depreciation is calculated upto Nov) $ 1,540 $ 20,350 133200/6*11/12 (depreciation is calculated upto Nov) $ 20,350 $ 630 930-300 $ 630 $ 294 50400*7%*1/12 $ 294 No Accounts Title 1 Insurance Expense Prepaid Insurance 2 Depreciation expenses - Equipment Accumulated Depreciation - Equipment Depreciation expenses - Vehicle Accumulated Depreciation - Vehicle 3 Supplies Expenses Supplies 4 Interest Expenses Interest payable Unearned Revenue Fee Earned 6 Salaries Expenses Salaries payable 7 Accounts receivables Fee Earned 8 Advertising Expenses Advertising Expenses payable Rent Expenses Prepaid Rent 10 Income Tax Expenses Income Tax Expenses payables $ 16,000 $ 16,000 $ 700 $ 700 $ 1.250 $ 1.250 $ 280 $ 280 $ 1.200 2400/2 (Rent Expenses is calculated for Nov) $ 1.200 $ 600 $ 600