Question

In: Accounting

The following trial balance was taken from the books of Venus Corporation at December 31, 2020:...

The following trial balance was taken from the books of Venus Corporation at December 31, 2020:

Account                                                                                                           Debit            Credit

Cash........................................................................................................... $   40,000

Accounts Receivable.................................................................................... 106,000

Prepaid Rent ...............................................................................................     12,800                  

Note Receivable................................................................................................ 8,000

Merchandise Inventory................................................................................... 54,000

Unexpired Insurance......................................................................................... 4,800

Furniture and Equipment.............................................................................. 138,000

Accumulated Depreciation........................................................................................         15,000

Accounts Payable.......................................................................................................         12,600

Common Shares.........................................................................................................         44,000

Retained Earnings......................................................................................................         65,000

Sales...........................................................................................................................       410,000

Cost of Goods Sold....................................................................................... 128,000

Salaries Expense............................................................................................. 53,000

       Totals.................................................................................................. $ 546,600   $ 546,600

At year end, the following items have not yet been recorded.

1.    Insurance expired during the year, $ 3,000.

2.    Depreciation on furniture and equipment, 10% per year.

3.    Interest at 9% is receivable on the note for one full year.

4.    Prepaid rent used up during the year, $6,000.

5.    Accrued salaries at December 31, $ 6,200.

Instructions

a)         Prepare in good form the necessary adjusting entries, adding any new accounts which you may need. Narratives (explanations) are not required for journal entries.

b)    Prepare the necessary closing entries.

Solutions

Expert Solution

a.

Date Account title and explanation Debit Credit
1 '12/31/2020 Insurance expense $3,000
Prepaid insurance $3,000
[To record insurance expense]
2 '12/31/2020 Depreciation Expense [138000 x 10%] $13,800
Accumulated depreciation $13,800
[To record depreciation expense]
3 '12/31/2020 Interest receivable [8,000 x 9%] $720
Interest revenue $720
[To record accrues interest revenue]
4 '12/31/2020 Rent expense $6,000
Prepaid rent $6,000
[To record rent expense]
5 '12/31/2020 Salaries expense $6,200
Salaries payable $6,200
[To record accrued salaries expense]

b.

Date Account title and explanation Debit Credit
1 '12/31/2020 Sales $410,000
Interest revenue $720
Income Summary $410,720
[To close revenue accounts]
2 '12/31/2020 Income Summary $210,000
Cost of goods sold $128,000
Salaries expense [$53,000+$6,200] $59,200
Insurance expense $3,000
Depreciation expense $13,800
Rent expense $6,000
[To close expenses account]
3 '12/31/2020 Income summary [$410,720-$210,000] $200,720
Retained earnings $200,720
[To close cincome summary account]

ekkarill92 answered 1 year ago
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