Question

30 End of Month adjustments Insurance is paid once a year in advance on 1 June each year. No adjustment has been made during the year. Wages owing at 30 June $220. A stocktake in the office reveals that Packaging Materials on Hand are $640. Depreciation: Warehouse Fixtures and Fittings depreciation is based on 15 years usage and the straight line method (residual value $6 000) → The old Delivery Truck sold on 30 June is depreciated at 20% using the diminishing balance method (residual 58 000). The new Delivery Truck bought on 30 June is to be depreciated at 25% using the diminishing balance method (residual $10.000). The Telephone and Internet account for June for S250 has not been received or paid. Allowance for Doubtful Debts needs to be adjusted to equal 8% of Accounts Receivable Control at 30 June A stocktake revealed the following closing balances: Day Pack 34 Hiking Pack

complete adjusting entries in June. On 1st june, paid the annual insurance premium of $1956.Please include the formula so that I could know how you could have those figure. Thanks

Answer 1

Debit Credit General Journal No. Date Account Titles and Explanation 30-Jun Insurance expense (1956*1/12) Prepaid insurance (To record the insurance expired) 163 163 220 30-Jun Wages expense Wages payable (To record the wages expense incurred) 220 1,840 30-Jun Packaging expense (2480-640) Packaging materials (To record the packaging expense incurred) 1,840 200 30-Jun Depreciation expense-fixtures and fittings (42000-6000)/15*1/12 Accumulated depreciation (To record the depreciation expense on fixtures and fittings) (Cost - Residual Value)/Useful Life 200 4,167 Depreciation expense-delivery truck (65000-8000- 30-Jun 47000)/20%*1/12 Accumulated depreciation-delivery truck (To record the depreciation expense on delivery truck) (Cost - Residual Value - Accum. Depr.) X depr. % 4,167 The sale of truck entry will not come under adjusting entry 30-Jun No entry As purchase is made at month end, depreciation starts from next month. 250 30-Jun Telephone and interest expense Telephone and interest payable (To record the telephone and interest accrued) 250 435 30-Jun Bad debt expense (12503*8%)-565 Allowance for doubtful debts (To record adjustment for uncollectable accounts) (Accounts receivable control X 8%) - Allowance for doubtful debts 435 30-Jun No entry It is just an ending balance of a portion of the inventory. Please give likes for the work. Thanks & Regards. Activate Windows