Question

Unadjusted Trial Balance December 13, 2018 Account Balance Bank 499.200 Interest Payable 480.000 Bank Loan (5 years) 1.472.00 0 Notes Receivable 896.000 2.880.00 Service Revenue 0 Cost of Service 1.536.00 0 Office Supplies 57.600 Accumulated Depreciation (Building) 896.000 Equipment 704.000 Marketing Expense ???? 1.280.00 Building 0 Depreciation Expense (Building) 192.000 Interest receivable 240.000 Note payable (3 years) 800.000 Cash 89.600 Profit from sale of equipment 19.200 Account Receivable 364.800

XY Merchandising Company was established on January 1, 2018. As of December 31, 2018, 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, 2018.
As of December 31, 2016, $20.000 of the Unearned Service Revenue is earned.

Question:

1) Find the Marketing Expense for the year of 2018 (Write all the accounts to debit or credit sides while considering their nature. The total of debit and credit sides should be equal.)

2) Prepare and journalize the adjusting entries.

3) Prepare the adjusted trial balance.

Answer 1

1. Adjusting Entries -

Credit XY Merchandising Company Adjusting Entries Date Accounts Title Debit Dec 31 Supplies Expense $ 5,000 Office Supplies (Being Office Supplies utilised) $ 5,000 Dec 31 Interest Receivable $ 10,000 Interest Revenue (Being Accrued interest income booked) $ 10,000 Dec 31 Rent Expense $ 15,000 Prepaid Rent (Being Rent Expense incurred) $ 15,000 Dec 31 Unearned Service Revenue $ 20,000 Service Revenue (Being unearned Service revenue Earned) $ 20,000

2. Adjusted Trial Balance -

Credit $ 576,000 XY Merchandising Company Adjusted Trial Balance Accounts Title Debit Bank $ 499,200 Cash $ 89,600 Accounts Receivable $364,800 Prepaid Rent $ 145,000 Notes Receivable $ 896,000 Office Supplies $ 52,600 Interest Receivable $ 250,000 Land $ 2,560,000 Equipment $ 704,000 Accumulated Depreciation (Equipment) Building $ 1,280,000 Accumulated Depreciation (Building) Accounts Payable Interest Payable Unearned Service Revenue Bank Loan (1 Year) Bank Loan (5 Years) Notes Payable (3 Years) Capital Service Revenue Interest Revenue Profit on Sale of Equipment $ 19,200 Cost of Service $ 1,536,000 Depreciation Expense (Equipment) $ 512,000 Depreciation Expense (Building) $ 192,000 Service Discount $ 80,000 Insurance Expense $ 112,000 Interest Expense $ 153,600 Rent Expense $ 351,000 Utilities Expense $ 614,400 Supplies Expense $ 5,000 Marketing Expense $ 153,600 $ 896,000 $ 448,000 $ 480,000 $ 204,000 $ 160,000 $ 1,472,000 $ 800,000 $ 2,464,000 $ 2,900,000 $ 170,000 Total $ 10,570,000 $10,570,000