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In: Accounting

QUESTION ONE (20 MARKS) You have been provided with the end of year, unadjusted trial balance...

QUESTION ONE

You have been provided with the end of year, unadjusted trial balance for Tina’s Managerial Advice business and the balance day adjustments to be implemented. Tina commenced business on 1st July 2018.

Required:

1.         Provide the General Journal entries for the:                               

i)         Balance day adjustments on the 31st October 2018;

ii)        Reversing entries where required on 1st November 2018.

(9 Marks)

            2.         Provide an Income Statement for the period ending 31st October 2018.                                                                                                                                

3.         Provide a fully classified Balance Sheet showing.                     

4.         Explain the role of the Prepaid Contents Insurance and the Unearned Advice Commissions Revenue accounts in this business.        (2 Marks)

TINA’S MANAGERIAL ADVICE SERVICE

UNADJUSTED TRIAL BALANCE AS AT 31st OCTOBER 2018

ACCOUNT                                                                           DEBIT $     CREDIT $

Cash at bank                                                                         25,440

Accounts Receivable                                                           91,000

Allowance for Doubtful Debts                                                                    2,000

Office Supplies Inventory                                                        300

Prepaid Contents Insurance                                               4,800

Prepaid Rent of offices                                                        12,000

Photocopier (Purchased 1st July 2017)                              60,000

Accounts Payable                                                                                        32,000

Unearned Advice Services Revenue                                                          3,340

VAT Collected (20%)                                                                                   22,068

VAT Paid (20%)                                                                   2,287

Loan from WES Bank Ltd (due 30th June 2025)                                      80,000

Capital – Tina Tobin                                                                                   36,219

Drawings – Tina Tobin                                                       10,000

Advice Service Revenue                                                                            134,000

Electricity – Office                                                                  3,100

Discount Expense                                                                      300           

Advice staff bonus                                                                  6,800           

Advice staff wages                                                              78,200

Office Staff wages                                                                15,400

           

TOTAL                                                                                $309,627          $309,627

QUESTION ONE CONTINUED

Additional Information

  • The 12-month Content Insurance policy was paid on 1st July 2018.

  • An Accounts Receivable of $1,000 is uncollectible and is to be written off. The policy is to have the Allowance for Doubtful Debts equal to 1% of net Advice Service Revenue.

  • The Photocopier is to be depreciated using a unit method; it is anticipated that the photocopier will be kept till it has produced 2,000,000 copies and then be traded in for $10,000. As at 30th October 2018 it had produced 80,000 copies.

  • $1,340 of the Unearned Advice Services Revenue had been earned, but not recorded on 29th October 2018.

  • Advice Staff Wages amounting to $2,600 had been incurred but not yet paid as at 31st October 2018.

  • Office Supplies on hand as at 31st October were valued at $170.

  • $4000 of the Prepaid Rent of Showroom figure relates to the month of November 2018.

Solutions

Expert Solution

ekkarill92 answered 2 years ago
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