In: Accounting
Shown below is the trial balance for Dunbar Corporation as at June 30, 2017, the company's year end. The company owner provides you with the following additional information:
-No interest has been paid yet on the note payable. The note has been outstanding since April 1 and the interest rate is 12%
-The equipment originally cost $200,000 and has an estimated residual value of $10,000 and a useful life of 10 years.
- On June 1 the company renewed its insurance policy and paid a $1800 premium for the year. It was correctly recorded at that time as prepaid insurance.
-On October 1, 2016 the company sold a 12-month service contract to a client for $200,000 and recorded it as Unearned Revenue because at that point they had not yet provided any service to the client.
DUNBAR CORPORATION
TRIAL BALANCE
AS AT JUNE 30, 2017
DEBIT |
CREDIT |
|
Cash |
8,900 |
|
Accounts receivable |
28,000 |
|
Prepaid insurance |
1,200 |
|
Equipment |
100,000 |
|
Accumulated amortization |
6,000 |
|
Accounts payable |
12,000 |
|
Note payable |
20,000 |
|
Unearned revenue |
18,000 |
|
Common shares |
10,000 |
|
Retained earning |
6,700 |
|
Sales & service revenue |
240,000 |
|
Salaries |
120,000 |
|
Rent |
24,000 |
|
Supplies expense |
29,500 |
|
Amortization expense |
0 | |
Insurance expense |
1,100 |
|
Interest expense |
0 | |
TOTAL |
$312,700 |
$312,700 |
Required
Prepare any adjusting entired required.
Answer
Adjustment # |
Accounts title |
Debit |
Credit |
#1 |
Interest Expense [20000 x 12% x 3/12] |
$ 600.00 |
|
Interest payable |
$ 600.00 |
||
(Interest accrued for 3 months : April to June) |
|||
#2 |
Amortisation [Depreciation] expense |
$ 19,000.00 |
|
Accumulated Amortisation [(200000-10000)/10] |
$ 19,000.00 |
||
(Equipment depreciated) |
|||
#3 |
Insurance Expense |
$ 150.00 |
|
Prepaid Insurance |
$ 150.00 |
||
(Insurance expired for 1 month = 1 June to 30 june) |
|||
#4 |
Unearned Revenue [200000 x 9/12] |
$ 150,000.00 |
|
Sales & Service revenue |
$ 150,000.00 |
||
(Unearned Revenue now earned for 9 months: 1 Oct to 30 June) |