Question

4. An officer of Ramirez Corn. purchased a new home computer for personal use with company money, charging miscellaneous expense. 5. A machine, that cost $40,000, is reported at its current market value of $45,000, Problem -2 Adjusting and closing entries. (30 points) The following trial balance was taken from the books of Fisk Corporation on December 31, 2014 Account Cash Debit Credit $ 9,000 Accounts 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 Accounts Payable 10,800 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 $406.600 Totals $406.600 20w 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 gross sales. c. Depreciation on equipment, 10% 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. Instructions (a) Prepare the necessary adjusting entries. (b) Prepare adjusted trial balance (c) Prepare closing entries to income summary account

Please do it step by step or hand writing thx

Answer 1

Adjustment entries Date Ans a Date Dec 31, 2018 Insurance Expense Particulars Debit Credit $2,000 a Prepaid Insurance (To record insurance expense) $2,000 Dec 31, 2018 Bad Debt Expense b $1,000 $1,000 [$280000 x 1%)-$1800] Allowance for Doubtful Accounts (To record provision for bad debt) Dec 31, 2018 Depreciation Expense [$110000 x 10 % $11,000 C Accumulated Depreciation Equipment (To record depreciation expense) $11,000 [$10000 x 5%] $500 d Dec 31, 2018 Interest Receivable $500 Interest Income (To record interest Income) Dec 31, 2018 Prepaid Rent $5,400 Rent Expense $5,400 (To record prepaid rent) Dec 31, 2018 Salaries and Wages Expense Salaries and Wages Payable (To record accrual of salaries expense) f $5,800 $5,800

Fisk Corporation Ans b Trial Balance Adjusted Trail Balance Entry Adjustment December 31, 2014 December 31, 2014 Particulars Debit Credit Debit Credit Debit Credit Cash $9,000 $0 $9,000 Accounts Receivable $40,000 $40,000 Notes Receivable $10,000 $10,000 $500 Interest Receivable $500 $0 Allowance for Doubtful Accounts Inventory Prepaid Insurance Prepaid Rent Equipment Accumulated Depreciation Equipment Accounts Payable Salaries and Wages Payable $1,800 $1,000 $2,800 $44,000 $2,800 $5,400 $110,000 $44,000 $4,800 $0 $2,000 $5,400 $110,000 $0 $11,000 $0 $5,800 $15,000 $26,000 $10,800 $5,800 $44,000 $55,000 $280,000 $500 - $10,800 $0 $0 $44,000 $55,000 $280,000 Common Stock $0 $0 Reatined Earnings Sales Revenue $0 $0 $0 $0 $0 $500 Interest Income Cost of Good Sold Salaries and Wages Expense Rent Expense $126,000 $50,000 $12,800 $0 $126,000 $55,800 $7,400 $2,000 $11,000 $1,000 $424,900 $5,800 $0 $5,400 $2,000 $11,000 $1,000 $25,700 $0 Insurance Expense Depreciation- Expense Bad Debt Expense $25,700 $406,600 $406,600 $424,900

Ans c Closing Entries Particulars Debit Credit Date Dec 31, 2018 Sales Revenue $280,000 $500 Interest Income Income Summary $280,500 (To close the revenue account) Dec 31, 2018 Income Summary $203,200 Cost of Good Sold Salaries and Wages Expense Rent Expense $126,000 $55,800 $7,400 Insurance Expense $2,000 Depreciation - Expense $11,000 Bad Debt Expense $1,000 (To close the expense account) Dec 31, 2018 Income Summary Retained Earnings $77,300 $77,300 (To close the profit account)