Question

The following information relates to Joachim Anderson, Realtor, at the close of the fiscal year ending December 31:

 

1.		Joachim paid the local newspaper $300 for an advertisement to be run in January of the next year, and charged it to Advertising Expense.
2.		On November 1, Joachim signed a three-month, 10% note to borrow $12,000 from Yorkville Bank.
3.		The following salaries and wages are due and unpaid at December 31: sales, $1,300; office clerks, $1,000.
4.		Interest of $400 has accrued to date on a note that Joachim holds from Grant Muldaur.
5.		The estimated loss on bad debts for the period is $1,400.
6.		Stamps and stationery are charged to the Office Expense account when purchased; $100 of these supplies remain on hand.
7.		Joachim has not yet paid the December rent of $1,000 on the building his business uses.
8.		Insurance was paid on November 1 for one year and charged to Prepaid Insurance, $960.
9.		Property tax accrued, $1,500.
10.		On December 1, Joachim accepted Alana Zipursky’s two-month, 15% note in settlement of her $4,800 account receivable.
11.		On October 31, Joachim received $2,400 from Tareq Giza in payment of six months’ rent for Giza’s office space in the building and credited Unearned Rent Revenue.
12.		On September 1, Joachim paid six months’ rent in advance on a warehouse, $7,950, and debited the asset account Prepaid Rent.
13.		The bill from Light & Power Limited for December has been received but not yet entered or paid, $400. (Use Accounts Payable.)
14.		The estimated depreciation on equipment is $1,000.

Prepare annual adjusting entries as at December 31. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select \"No Entry\" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)

Answer 1

Joachim Anderson, Realtor

Journal Entries

S.No. Date Description Post reference Debit Credit

1 31-Dec Prepaid Expense A/c 310

Advertising Expense A/c 310

(For Recording prepaid Advertising Expense)

2 31-Dec Interest Expenses A/c 220

Outstanding Interest A/c 220

(For Recording outstanding interest 12,000*11%/12*2)

3 31-Dec Sales Salary A/c 1,400

Outstanding Salary A/c 1,400

(For Recording outstanding sales salary)

4 31-Dec Office Salary A/c 1,050

Outstanding Salary A/c 1,050

(For Recording outstanding office salary)

5 31-Dec Accrued Interest A/c 400

Interest On Notes A/c 400

(For Recording Accrued interest)

6 31-Dec Bad Debts Expense A/c 1,570

Allowance For Doubtful Accounts A/c 1,570

(For Recording estimated bad debts)

7 31-Dec Supplies A/c 140

Office Expenses A/c 140

(For Recording closing supplies which wee charged to office exp.)

8 31-Dec Rent Expenses A/c 1,100

Outstanding Rent A/c 1,100

(For Recording unpaid rent for Dec)

9 31-Dec Prepaid Expense A/c 1,032

Interest Expense A/c 1,032

(For Recording prepaid interest Expense)

10 31-Dec Property Tax A/c 1,800

Outstanding Tax A/c 1,800

(For Recording accrued property taxes )

11 31-Dec Notes Receivable A/c 7,200

Account Receivable A/c 7,200

(For Recording 15% note in settlement of her $7,200 account receivable.)

12 31-Dec Accrued Interest On Notes A/c 90

Interest On Notes A/c 90

(For Recording Accrued interest 15%*7,200*1/12)

13 31-Dec Unearned Rent Revenue A/c 900

Rent Income A/c 900

(For Recording rent earned for nov & Dec i. e 2,700/6*2)

14 31-Dec Rent Exp. A/c 5,700

Prepaid Rent A/c 5,700

(For Recording rent exp for Sep to Dec i. e 8,550/6*4)

15 31-Dec Electricity Exp. A/c 400

Outstanding Electricity Exp. A/c 400

(For Recording O/s Electricity bill)

16 31-Dec Depreciation A/c 1,100

Equipment A/c 1,100

(For Recording Depreciation on equipment)

31-Dec Depreciation A/c 1,100

Equipment A/c 1,100