Question

The requirements of the following question are to record the adjusting journal entries for #1-10, the trial balance is included to record these adjustments.

The trial balance of Veggies-R-Us., at December 31, 20XX, and the data needed for the year-end adjustments follow. (Round all results to the nearest whole dollar amount.)

1. The dollar value of supplies on hand at year end = $5,250; this was determined after taking a physical inventory.
2. Prepaid rent still in force at December 31, $900.
3. Depreciation on furniture for the year, $210.
4. Depreciation on building for the year, $1,980.
5. Depreciation on equipment for the year, $1,125.
6. At the end of the year, Veggies-R-Us. owed P-Tato $480 and $820 to other employees of the company for work performed during the year just ended.
7. Unearned revenue, customer deposits still unearned at December 31 was $3,125.
8. Veggies-R-Us. uses the allowance method to determine their bad debt expense. The allowance for bad debts is based upon the balance in accounts receivable. Based upon past experience Veggies-R-Us. uses the rate of 0.75% (.0075) of accounts receivable to determine the appropriate balance in the Allowance for Doubtful accounts. Round the balance in this allowance account (your calculated year end balance) to the nearest whole dollar.
9. Bonds payable info: The principal amount (a.k.a. face value, par value, stated value) of these bonds = $150,000. These bonds have a 10 year term. The stated rate (a.k.a. contract rate, nominal rate, contract rate) of interest on these bonds = 5%. Theses bonds are dated July 1, 20XX (current year) and were sold on July 1, 20XX (current year) for the sum of $156,000.

Interest on these bonds is to be paid semi-annually on January 1 and July 1 of each year. An entry needs to be made for December 31’s accrued interest due and for the appropriate amount relating to the amortization of the premium (use straight-line amortization for this premium). A check will be written and issued for the appropriate amount of interest due on January 1.

10. The investments that A. Duck Ponds currently has in their investment account (current asset) represents investments that were purchased recently. Based upon stock market quotes obtained for December 31, the market value of these investments = $112,000.

Veggies-R-Us.

Trial Balance

December 31, 20XX

Account Title		Debit	Credit
Cash		$26,750
Accounts receivable		47,630
Allowance for doubtful accounts		250
Prepaid rent		1,680
Supplies		8,700
Investments		113,520
Furniture		15,350
Accumulated depreciation-furniture			12,800
Equipment		44,600
Accumulated depreciation-equipment			1,830
Building		89,900
Accumulated depreciation-building			28,600
Accounts payable			6,240
Salary payable
Unearned revenue, customer deposits			25,500
Bonds payable			150,000
Premium of bonds payable			6,000
Common stock			20,000
Retained earnings			54,920
Dividends		5,250
Revenue			132,400
Salary expense		51,600
Rent expense		5,000
Utilities expense		10,410
Depreciation expense-furniture		0
Depreciation expense-equipment		0
Depreciation expense-building		0
Advertising expense		5,650
Supplies expense		12,000
Bad debts expense		0
Interest expense		0
Total		$438,290	$438,290

Answer 1

Particulars	Dr	Cr
Loss on Inventory	$         3,450
Inventory		$          3,450
(Difference in Inventory value)
Rent Exp	$            780
Prepaid rent		$             780
(Prepaid rent adjusted to expense)
Depreciation exp - furniture	$            210
Accumulated Depreciation (furniture)		$             210
(Furniture depreciation)
Depreciation exp building	$         1,980
Accumulated Depreciation (Building)		$          1,980
(Depreciation on Building)
Depreciation exp equipment	$         1,125
Accumulated Depreciation (Equipment)		$          1,125
(Depreciation on Equipment)
Salary Expense	$         1,300
P-Tato		$             480
Salary payable		$             820
(Payables)
Unearned revenue, customer deposits	$      22,375
Revenue		$       22,375
(Unearned revenue adjusted)
Allowance for doubtful accounts	$            107
Accounts receivable		$             107
(Adjustment of Allowance for doubtful accounts)
Interest Expense	$         3,450
Premium of bonds payable	$            300
Bank		$          3,750
(Bond Interest payment and adjustment of premium)
Loss on Investment	$         1,520
Investment		$          1,520
(Loss on value of Investment)