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

Adjusting entries
S.no. Accounts title and explanations Debit $ Credit $
a. Insurance expense 3000
    Prepaid insurance 3000
(for insurance expired)
b. Depreciation expense 13800
   Accumulated dep 13800
(for depreciation charged)
c. Interest receivable 720
   Interest revenue (8000*9%) 720
(for interest revenue earned not received)
d. Rent expenses 6000
    prepaid rent 6000
(for rent expired)
e. Salaries expense 6200
    Salaries payable 6200
(for salaries accrued)
Closing entries
S.no. Accounts title and explanations Debit $ Credit $
a. Sales 410000
Interest revenue 720
     Income Summary 410720
(fro closing the revenues)
b. Income summary 210000
   Cost of goods sold 128000
   Salaries expense (53000+6200) 59200
   Insurance expense 3000
   Depreciation expense 13800
   Rent expenses 6000
(for closing the expense)
c. Income summary (410720-210000) 200720
    Retained earnings 200720
(for closing the net income)

ekkarill92 answered 2 years ago
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