Question

In: Accounting

Shown below is the trial balance for Dunbar Corporation as at June 30, 2017, the company's...

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.

Solutions

Expert Solution

Answer

  • Adjusting Entries, as asked

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)

ekkarill92 answered 3 years ago
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