Answer
Adjusting entries -
S.No. | Account Titles | Debit ($) | Credit ($) |
a. | Supplies Expense | 135 | |
Supplies (300 - 50- 115) |
135 | ||
b. | Shipping Supplies Expense | 310 | |
Shipping Supplies (400-90) |
310 | ||
c. | Wages Expense | 1,000 | |
Wages Payable |
1,000 | ||
d. | Depreciation Expense | 260 | |
Accumulated Depreciation - Delivery Van |
260 | ||
e. | Depreciation Expense | 60 | |
Accumulated Depreciation -Computer equipment |
60 | ||
f. | Insurance Expense | 225 | |
Prepaid Insurance (2,700×1/12) |
225 | ||
g. | Rent expense | 600 | |
Prepaid rent (2,400 × 1/4) |
600 | ||
h. | Advertising and Promotion expense | 250 | |
Prepaid advertising (500-250) |
250 | ||
i. | Interest Expense | 75 | |
Interest payable (10,000 × 9% × 1/12) |
75 | ||
j. | No Entry |
Working Notes :
1.Depreciation of Van = (Cost - salvage value )/ useful life = [{(16,000 + 600) - 1,000)}/5 × 1/12] = 260
2. Depreciation of computer = cost / useful life × 1/12
Assuming loan from Office Mart is taken for 12 months as time period not mentioned. Therefore cost = 300*12 = $3,600 and useful life of computer is 5 years
Depreciation = ( 3,600/ 5) × 1/12 = $60
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