Question

Question 2                            

Required: Prepare the proper ADJUSTING journal entries for the following events. Also, prepare a balance sheet after adjusting entries have been made.

The unadjusted trial balance for Tahini & Jam Inc. appears below:

                                       Tahini & Jam Inc.

                                  Unadjusted Trial Balance

                                      December 31, 2020

                                                                     Debit                    Credit

Cash                                                         $75,500

Accounts receivable                                    5,000

Prepaid rent                                                 1,000

Prepaid insurance                                      15,000

Supplies                                                       3,000

Equipment                                                 40,000

Accumulated depreciation-equipment                                     $4,000

Accounts payable                                                                     11,000

Bank loan payable                                                                  10,000

Unearned service revenue                                                        10,500

Common shares                                                                       48,250

Retained earnings                                                                    32,000

Dividends                                                    5,000

Service revenue                                                                       44,600

Salary expense                                             7,200

Utilities expense                                          1,200

Rent expense                                               5,250

Advertising expense                                    2,200             ________

                                                               $160,350               $160,350

Additional data is as follows. Record the adjusting entry below the information.

1. Unearned service revenue NOT YET earned at year end, $2,000.

Dr.

Cr.

2. Depreciation for the current year amounts to $4,500.

Dr

Cr.

3. Prepaid insurance consists of a policy purchased on January 1, 2020 for a 15 months coverage.

Dr.

Cr.

4. Supplies on hand/counted at year end amount to $1,200.

Dr.

Cr.

5. Accrued salaries on December 31, 2020, amount to $2,500.

Dr.

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6. The bank loan was received on March 1, 2020, and the annual interest rate was 12%.

Dr.

Cr.

7. Rent is $500/month, and January, 2021 rent is included in the trial balance amount.

Dr.

Cr.

8. Corporate income tax is 20% of net income before tax.

Dr.

Cr.

Answer 1

Adjusting Entries:

Date	Account Name	Debit	Credit
A.	Unearned Service Revenue	$8,500
	Service Revenue ( $10,500-2000)		$8,500
	( to record service revenue.)
B.	Depreciation Expense	$4,500
	Accumulated Depriciation		$4,500
	( to record dep. Exp.)
C.	Insurance Expense	$12,000
	Prepaid Insurance ( $15,000×12/15)		$12,000
	( to record insurance exp.)
D.	Supplies Expense	$1,800
	Suppliest(3000-1200)		$1,800
	( to record supplies exp.)
E.	Salary & Wagerg Expense	$2,500
	Salary & Wages Payable		$2,500
	( to record salary exp.)
F.	Interest Expense	$1000
	Interest Payable( 10,000 ×12%× 10/12)		$1000
	( to record interest expense)
G.	Rent Expense	$500
	Prepaid Rent ( 1000 -500)		$500
	( to record rent exp.)
H.	Tax Expense	$5,750
	Income Tax Payable (28,750×20%)		$5,750
	( to record tax expense.)

Working

1) Net Income:

Revenue - Exp.

( $ 44,600 +8500) - (7200+1200+5250+2200+4500+12,000+1800+2500+1000+500+5750)

= $ 28,750

2) Retained Earning:

Retained earning ( beg bala)	$32,000
Add: Net Income( 53,100-43,900)	$9,200
Less: Dividend	($5000)
Retained Earning ( End bal.)	$36,200

Req.2 Balance sheet

Tahini & Jam Inc
Balance Sheet
December,31,2020
Assets	Amount	Liab.& Stockholder's Equity	Amount
Current Assets		Liability:
Cash	$75,500	Account Payable	$11,000
Account Receivable	$5,000	Bank Loan Payable	$10,000
Prepaid Rent(1000-500)	$5,00	Unearned Service Revenue	$2000
Prepaid Insurance( 15000-12000)	$3,000	Salaries& Wages Payable	$2500
Supplies	$1200	Interest Payable	$1000
Total Current Assets	$85,200	Tax Payable	$5750
Non current Assets
Equipment	$40,000	Total Liability	$32,250
Less: Accumulated Dep(4000+4500)	($8500)
Net Equipment	$31,500	Stockholder's Equity
		Comon Stock	$48,250
		Retained Earning	$36,200
		Total Stockholder's Equity	$84,450
Total Assets	$116,700	Total Liab. & Equity	$116,700