Question

In: Accounting

Metro Rent – A Car Unadjusted Trial Balance Dec. 31, 2007 Account Name Debits Credits Cash...

Metro Rent – A Car

Unadjusted Trial Balance

Dec. 31, 2007

Account Name

Debits

Credits

Cash in Bank

120,000

Shop Supplies Inventory

25,300

Prepaid Insurance

19,200

Mitsubishi Cars

1,500,000

Accumulated Depreciation

0

Accrued Commission Expense

0

Unearned Rental Income

25,000

M. Capital

1,507,000

Car Rental Income

160,000

Gasoline Expense

18,000

Insurance Expense

0

Repairs & Maintenance

9,500

Depreciation Expense

0

Shop Supplies Used

0

Commission Expense

0

Totals

$1,692,000

$1,692,000
  1. Car insurance covers the period from June 1, 2007 to June 1, 2008.
  2. The cars have an estimated life of 5 years without scrap value at the end of its life. Date of acquisition, January 1, 2007.
  3. Advance car rental was received for a 10 day servicing, starting from December 26, 2007 to January 4, 2008.
  4. Unpaid service drivers’ commissions $2,000.
  5. Shop supplies inventory at December 31, 2007, $9,500.

Prepare the:

  1. Adjusting entries
  2. Income statement for the quarter ended
  3. Statement of change in owners’ equity
  4. Balance sheet as of December 31, 2007

Solutions

Expert Solution

adjusting entries:
a)7 months expired
insurance expnese(db)19200*(7/12)=11200
prepaid insurance(cr)11200
b)depreciaiton =(cost-salvage)/years
=(1500000-0)/5=300000
depreciation expense(db)300000
accumulated depreciation(cr)300000
c)6 days rent earned and amount is =(6/10)*25000=15000
unearned rental income(db)15000
rental income(cr)15000
d)commission expense(db)2000
accrued commision expense(cr)2000
e)shop supplies used(db)25300-9500=15800
shop supplies inventory(cr)15800

ekkarill92 answered 2 years ago
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