Question

Thanos Merchandising Company Unadjusted Trial Balance December 13, 2019 Account Balance Bank 218.400 Interest Payable 210.000 Bank Loan (5 years) 644.000 Notes Receivable 392.000 Service Revenue 1.260.000 Cost of Service 672.000 Office Supplies 25.200 Accumulated Depreciation (Building) 392.000 Equipment 308.000 Marketing Expense ???? Building 560.000 Depreciation Expense (Building) 84.000 Interest receivable 105.000 Note payable (3 years) 350.000 Cash 39.200 Profit from sale of equipment 8.400 Account Receivable 159.600 Capital 1.078.000 Utilities Expense 268.800 Accounts Payable 196.000 Bank Loan (1 year) 70.000 Rent Expense 147.000 Prepaid Rent 70.000 Interest Expense 67.200 Accumulated Depreciation (Equipment) 252.000 Service discount 35.000 Land 1.120.000 Depreciation Expense (Equipment) 224.000 Interest Revenue 70.000 Insurance Expense 49.000 Unearned Service Revenue 98.000

Thanos Merchandising Company was established on January 1, 2019. As of December 31, 2019, the following additional information is available:

$5.000 of Office Supplies has been used.
Accrued interest revenue is $10.000.
$15.000 of prepaid rent has expired as of December 31, 2019.
As of December 31, 2017, $20.000 of the Unearned Service Revenue is earned.

Required:
A) Find the Marketing Expense for the year of 2019 (Hint: Write all the accounts to debit or credit sides while considering their nature. The total of debit and credit sides should be equal.) (10 points)
B) Prepare and journalize the adjusting entries. (20 points)
C) Prepare the adjusted trial balance. (20 points)
D) Journalize the closing entries. (20 points)
E) Prepare Income Statement and Statement of Financial Position (Balance Sheet) of Thanos Service Company in proper form. (30 points)

Answer 1

A)	Account				Debit	Credit
	Bank				218400
	Interest payable					210000
	Bank loan (5 years)					644000
	Notes receivable				392000
	Service revenue					1260000
	Cost of service				672000
	Office supplies				25200
	Accumulated depreciation (Building)					392000
	Equipment				308000
	Marketing expense				4200
	(Balancing figure in debit side)
	Building				560000
	Depreciation expense (Building)				84000
	Interest receivable				105000
	Note payable (3 years)					350000
	Cash				39200
	Profit from sale of equipment					8400
	Account receivable				159600
	Capital					1078000
	Utilities expense				268800
	Accounts payable					196000
	Bank loan (1 year)					70000
	Rent expense				147000
	Prepaid rent				70000
	Ineterst expense				147000
	Accumulated depreciation (Equipment)					252000
	Service discount				35000
	Land				1120000
	Depreciation expense (Equipment)				224000
	Interest revenue					70000
	Insurance expense				49000
	Unearned service revenue					98000
					4628400	4628400
B)	Adjusting entries:
	Date	Account titles and explanation				Debit	Credit
	Dec 31.	Supplies expense		(25200-5000)		20200
		Office supplies					20200
		(Supplies used)
	Dec 31.	Interest receivable				10000
		Interest revenue					10000
		(Interest accrued)
	Dec 31.	Rent expense				15000
		Prepaid rent					15000
		(Prepaid rent expired)
	Dec 31.	Unearned service revenue				20000
		Service revenue					20000
		(Service revenue earned)

Debit Credit 218400 210000 644000 392000 1280000 672000 5000 392000 308000 4200 C) Adjusted trial balance Account Bank Interest payable Bank loan (5 years) Notes receivable Service revenue (1260000+20000) Cost of service Office supplies (25200-20200) Accumulated depreciation (Building) Equipment Marketing expense (Balancing figure in debit side) Building Depreciation expense (Building) Interest receivable (105000+10000) Note payable (3 years) Cash Profit from sale of equipment Account receivable Capital Utilities expense Accounts payable Bank loan (1 year) 560000 84000 115000 350000 39200 8400 159600 1078000 268800 196000 70000

70000 162000 55000 147000 2520001 35000 Bank loan (1 year) Rent expense (147000+15000) Prepaid rent (70000-15000) Ineterst expense Accumulated depreciation (Equipment) Service discount Land Depreciation expense (Equipment) Interest revenue (70000+10000) Insurance expense Supplies expense Unearned service revenue (98000-20000) 1120000 224000 80000 49000 20200 780001 4638400 4638400 Debit Credit 1666200 D) Closing entries: Date Account titles and explanation Dec 31. Income summary Cost of service Marketing expense Depreciation expense (Building) Utilities expense Rent expense Ineterst expense Service discount 672000 4200 84000 268800 162000 147000 35000

147000 35000 224000 49000 20200 Dec 31. Ineterst expense Service discount Depreciation expense (Equipment) Insurance expense Supplies expense (To close revenue accounts) Service revenue Profit from sale of equipment Interest revenue Income summary (To close expense accounts) Capital (1666200-1368400) Income summary (To close net income) 1280000 8400 800001 1368400 Dec 31. 297800 297800 E) Income statement $ Service revenue Less:Service discount Net service revenue Less:Cost of service Gross profit Less:Operating expenses Marketing expense $ 1280000 35000 1245000 672000 573000 42001

4200 84000 268800 162000 224000 49000 20200 Marketing expense Depreciation expense (Building) Utilities expense Rent expense Depreciation expense (Equipment) Insurance expense Supplies expense Total operating expenses Operating income Other revenues/(expenses): Profit from sale of equipment Interest revenue Ineterst expense Net income 812200 -239200 8400 80000 -147000 -58600 -297800 Statement of financial position Thanos service company $ $ $ 39200 Assets Current asssets: Cash Bank Account receivable Office supplies 218400 159600 5000

5000 55000 115000 592200 1120000 56000 308000 252000 560000 392000 168000 392000 1736000 Office supplies Prepaid rent Interest receivable Total current assets Long-term assets: Land Equipment Less: Accumulated depreciation (Equipment) Building Less:Accumulated depreciation (Building) Notes receivable Total long-term assets Total assets Liabilities and owner's equity Current liabilities: Accounts payable Interest payable Bank loan (1 year) Unearned service revenue Total current liabilities Long-term liabilities: Bank loan (5 years) Note payable (3 years) Total long-term liabilities 2328200 196000 210000 70000 78000 554000 644000 350000 994000

350000 994000 1548000 Note payable (3 years) Total long-term liabilities Total liabilities Owner's equity: Capital (1078000-297800) Total liabilities and owner's equity 780200 2328200