Question

The trial balance of Winsor Corporation is reproduced below. Also below is the information relevant to the preparation of adjusting entries needed to both properly match revenues and expenses for the period and reflect the proper balances in the real and nominal accounts. Instructions As the accountant for Winsor Corporation, you are to: Prepare adjusting entries based on the following data, entering the adjustments on the work sheet and completing the additional columns with respect to the adjusted trial balance, income statement and balance sheet. Carefully key your adjustments and label all items Round all computations to the nearest dollar. Record in general journal format the adjusting, closing and any reversing entires. (a) Winsor determined that one percent of sales will become uncollectible. (b) Depreciation is computed using the straight-line method, with a ten-year life and $5,000 salvage value (c) Salesmen are paid commissions of 15% of sales Commissions on sales for December have not been paid. (d) The note was issued on October 1, bearing interest at 8%, due Feb. 1. 2018 (c) A physical inventory of supplies indicated $440 of supplies currently in stock (1) Provisions of a lease contract specify payments must be made one month in advance with monthly payments at $800mo. This provision has been complied with as of Dec 31, 2017 Winsor Corporation Work Sheet For the Year Ended December 31, 2017 Cash 420 Trial Balans Adjustments Adjusted TB Income Statement Balance Sheet Accounts Dr. Cr Dr Dr. CE Dr. 12,400 Equity Invest 14,050 Accounts Rec. 30,000 Allow. for D. A Inventory 16,800 Supplies 1,040 Equipment 65,000 Accum. Depr.-Equip 9,500 Accounts Payable 4,400 Notes Payable 10,000 Common Stock 40,000 Ret Earings 29,690 Sales Revenue 360,000 Cost of Goods Sold 245,520 Salaries and Wages Exp. 20,800 Sales Comm. Exp. 39,000 Rent Expense 7.200 Misc. Expense 2.200 Totals 454,010 454.010

Answer 1

40 Debit Credit 3,600 41 a) 42 Account Title & Explanation Bad Debts Expense (360000*1%) Allowance for doubtful Accounts (To record bad debts expense) 3,600 43 44 6,000 Depreciation Expense (65000-5000)/10 Accumulated Depreciation - Equipment (To record depreciation expense) 6,000 45 b) 46 47 48 49 C) 50 51 15,000 Sales Commission expense (360000 *15%) = 54000- 39000 Sales Commissions Payable (To record accrued sales Commissions) 15,000 52 200 53 d) 54 Interest Expense (10000 *8%*3/12) Interest Payable (To record accrued interest expense) 200 55 56 600 57 ) 58 59 Supplies expense (1040 - 440) Supplies (To record supplies consumed during the Year) 600

800 61 f) 62 Prepaid Rent Rent expense (To record Prepaid Rent) 800 63 64 65 66 67 68 Adjustments Dr. Cr. Income Statement Dr. Cr. 69 Winsor Corporation Worksheet For the year ended Dec.31,2017 Trial Balance Dr. Cr. 12,400 14,050 30,000 420 16,800 1,040 70 Adjusted Trial Balance Dr. Cr. 12,400 14,050 30,000 4,020 16,800 71 72 73 3,600 74 600 440 800 75 76 Cash Equity Investment Accounts Receivable Allowance for D.A Inventory Supplies Prepaid rent Equipment Accumulated Depreciation - Equipment Accounts Payable Notes Payable Sales Commissions Payable Interest Payable Common Stock Retained Earnings 800 65,000 Balance Sheet Dr. Cr. 12,400 14,050 30,000 4,020 16,800 440 800 65,000 15,500 4,400 10,000 15,000 200 40,000 29.690 65,000 77 6,000 78 9,500 4,400 10,000 79 80 15,000 200 15,500 4,400 10,000 15,000 200 40,000 29.690 81 82 40,000 29.690 83

84 360,000 360,000 360,000 85 86 87 88 15,000 245,520 20,800 39,000 7,200 2,200 800 Sales Revenue Cost of Goods Sold Salaries and Wages expense Sales Commission expense Rent expense Misc. Expense Bad Debts Expense Depreciation Expense Supplies expense Interest expense Total 245,520 20,800 54,000 6,400 2,200 3,600 6,000 600 245,520 20,800 54,000 6,400 2,200 3,600 6,000 600 89 90 91 92 93 3,600 6,000 600 200 26,200 200 94 454,010 454,010 26,200 478,810 478,810 360,000 139,490 200 339,320 20,680 360,000 95 Net Income 118,810 20,680 139,490 96 360,000 139,490 97