Question

1. On September 1, 2020, a student paid $6,000 for tuition for the academic year to his college (half for fall 2020 and half for spring 2021). Provide all necessary journal entries for the student in 2020.   

2. The following trial balance was taken from the books of Fisk Corporation on December 31, 2019.

Account                                                                             Debit tCredit

Cash                                                                                 $ 8,000

Account Receivable 40,000

Notes receivable 10,000   

Allowance for Doubtful Accounts $ 1,800

Inventory 44,000

Prepaid Insurance                                                            4,800

Equipment                                                                        110,000

Accumulated Depreciation-Equip 15,000

Account Payable                                                                                                                      9,800

Common Stock                                                                                                                       44,000

Retained Earnings                                                                                                              55,000

Sales Revenue 280,000

Cost of goods sold                                                                 126,000

Salaries and wages Expense                                                   50,000

Rent Expense                                                                        12,800

Totals                                                                                        $405,600                                     $405,600  

At year end, the following items have not yet been recorded.

a.      Insurance expired during the year, $2,000.

b.         Estimated bad debts, 1% of sales revenue.

c.         Depreciation on equipment, 5% per year on original cost.

d.         Interest at 5% is receivable on the note for one full year.

e.         Rent paid in advance at December 31, $5,400 (originally charged to expense).

f.          Accrued salaries and wages at December 31, $5,800.

Required:

(a)       Prepare the necessary adjusting entries.

(b)     Calculate the ending balance of retained earnings.

will you please explain, thank you

      

Answer 1

Requirement (a):

Date	Account title and explanation	Debit	Credit
Dec 31,2019	Insurance expense	$2,000
	Prepaid insurance		$2,000
	[To record insurance expense]
Dec 31, 2019	Bad debt expense [280,000 x 1%]	$2,800
	Allowance for doubtful accounts		$2,800
	[To record bad debt expense]
Dec 31, 2019	Depreciation Expense [$110,000 x 5%]	$5,500
	Accumulated depreciation-Equipment		$5,500
	[To record depreciation expense]
Dec 31, 2019	Interest receivable	$500
	Interest revenue [$10,000 x 5%]		$500
	[To record accrued interest revenue]
Dec 31, 2019	Prepaid rent	$5,400
	Rent expense		$5,400
	[To record rectification entry for prepaid rent]
Dec 31, 2019	Salaries and wages expense	$5,800
	Salaries and wages payable		$5,800
	[To record accrued salaries and wages expense]

Requirement (b):

Income Statement
Sales revenue		$280,000
Interest revenue		$500
Total revenues		$280,500
Expenses:
Insurance expense	$2,000
Cost of goods sold	$126,000
Salaries and wages expense [50,000 + 5,800 Adj.]	$55,800
Rent expense [$12,800 - $5,400 Adj.]	$7,400
Bad debt expense	$2,800
Depreciation expense	$5,500
Total expenses		$199,500
Net income		$81,000

.

Retained earnings, Beginning	$55,000
Add: Net income	$81,000
Retained earnings, Ending	$136,000