Question

Question 4 [30 points] Southgate Inc. is just finishing another year of operations. The company's unadjusted trial balance at April 30, 2014 is shown below. The following additional information is available at April 30 for the year just ended: a. The yearly depreciation on the furniture is $150 b. $250 of the rent paid to Southgate Inc. in advance has been eamed c. The Building was purchased in a previous year and will be sold for $15.750 after being used for ten years d. Interest of $1,130 has accrued on a bank loan and is unrecorded. e. $1,100 of the television advertising paid for in advance has been used f. Consulting work performed but unrecorded at the end of the year totalled $10.000 g. Interest of $270 on notes receivable is unrecorded and unpaid. h. Property taxes of $8,500 have accrued but are unrecorded Use this information to prepare adjusting entries at April 30, 2014, based on the above. Enter the adjustment letter as the description. The dates must be entered in the format dd/mmm (e. 15/Jan). General Journal Account Explanation Page Gud F Debit Credit Credit 400 15,850 14,800 Southgate Inc. Unadjusted Trial Balance April 30, 2014 Debit Accounts Payable Accounts Receivable Accumulated Depreciation, Building Accumulated Depreciation, Furniture Advertising Expense 2,900 Building 95,000 Share Capital Cash 129,250 Consulting Revenue Earned Depreciation Expense, Building Depreciation Expense, Furniture Furniture Interest Eamed Interest Expense 3.900 Interest Payable Interest Receivable Notes Receivable 14,500 Prepaid Advertising 1,800 Property Taxes Expense 1,300

Answer 1

Credit $ Adjusting Journal entries : Date Accounts Title & Explanation 30-Apr-14 Depreciation expense, Furniture To Accumulated depreciation, Furniture (Entry for recording of yearly depreciation on furniture) Debit $ 150 150 30-Apr-14 Unearned Rent 250 To Rent Revenue 250 (Entry for recording of Rent revenue out of prepaid rent) Annual depreciation on building is = (95000-15750/10 Annual depreciation on building is = $ 7,925/. 7,925 30-Apr-14 Depreciation expense, Building To Accumulated depreciation, Building (Entry for depreciation on building for the year) 7,925 1,130 30-Apr-14 Interest expense To Interest Payable (Entry for recording of Interest accrued on bank loan) 1,130 30-Apr-14 Advertising expense 1,100 To Prepaid Advertising (Entry for recording of advertising expense for advertisement used) 1,100 10,000 30-Apr-14 Accounts Receivable To Consulting Revenue (Entry for recording of consulting revenue earned) 10,000 270 30-Apr-14 Interest receivable To Interest earned (Entry for recording of Interest receivable on note) 270 8,500 30-Apr-14 Property taxes expense To Property taxes payable (Entry for recording of Property taxes accrued) 8,500