Question

Thanos Merchandising Company Unadjusted Trial Balance December 13, 2019
Account	Balance
Bank	187.200
Interest Payable	180.000
Bank Loan (5 years)	552.000
Notes Receivable	336.000
Service Revenue	1.080.000
Cost of Service	576.000
Office Supplies	21.600
Accumulated Depreciation(Building)	336.000
Equipment	264.000
Marketing Expense	????
Building	480.000
Depreciation Expense (Building)	72.000
Interest receivable	90.000
Note payable (3 years)	300.000
Cash	33.600
Profit from sale of equipment	7.200
Account Receivable	136.800
Capital	924.000
Utilities Expense	230.400
Accounts Payable	168.000
Bank Loan (1 year)	60.000
Rent Expense	126.000
Prepaid Rent	60.000
Interest Expense	57.600
Accumulated Depreciation(Equipment)	216.000
Service discount	30.000
Land	960.000
Depreciation Expense (Equipment)	192.000
Interest Revenue	60.000
Insurance Expense	42.000
Unearned Service Revenue	84.000

Thanos Merchandising Company was established on January 1, 2019. As of December 31, 2019, the following additional information is available:

1. $5.000 of Office Supplies has been used.

2. Accrued interest revenue is $10.000.

3. $15.000 of prepaid rent has expired as of December 31, 2019.

4. As of December 31, 2017, $20.000 of the Unearned Service Revenue is earned.

Required:

a. Find the Marketing Expense for the year of 2019 (Hint: Write all the accounts to debit or credit sides while considering their nature. The total of debit and credit sides should be equal.) (10 points)

b. Prepare and journalize the adjusting entries. (20 points)

c. Prepare the adjusted trial balance. (20 points)

d. Journalize the closing entries. (20 points)

e. Prepare Income Statement and Statement of Financial Position (Balance Sheet) of Thanos Service Company in proper form. (30 points

Answer 1

Answer:

Thanos Merchandising Company
Income Statement
December.31, 2019
Revenue:
Service revenue	$      1,100,000
Less: Service discount	30,000
Net service revenue		$   1,070,000
Less: Cost of service		576,000
Gross profit		494,000
Profit from sale of equipment		7,200
Interest revenue		70,000
Total revenue		571,200
Expenses:
Marketing expense (Note-1)	72,000
Depreciation expense-building	72,000
Utilities expense	230,400
Rent expense	126,000
Interest expense	57,600
Depreciation expense-equipment	192,000
Insurance expense	57,000
Office supplies expense	5,000
Total expenses		812,000
Net Profit/(loss)		(240,800)

Note-1:

Calculation of marketing expense:

	Debit	Credit
Bank	187,200
Interest payable		180,000
Bank Loan(5 year)		552,000
Notes receivable	336,000
Service revenue		1,080,000
Cost of service	576,000
Office supplies	21,600
Accumulated depreciation(Building)		336,000
Equipment	264,000
Marketing expense (Bal. Fig.)	72,000
Building	480,000
Depreciation expense(Building)	72,000
Interest receivable	90,000
Notes payable (3 years)		300,000
Cash	33,600
Profit from sale of equipment		7,200
Account receivable	136,800
Capital		924,000
Utilities expense	230,400
Account payable		168,000
Bank loan(1 year)		60,000
Rent expense	126,000
Prepaid rent	60,000
Interest expense	57,600
Accumulated Depreciation(Equipment)		216,000
Service discount	30,000
Land	960,000
Depreciation Expense (Equipment)	192,000
Interest revenue		60,000
Insurance expense	42,000
Unearned Service Revenue		84,000
Total	3,967,200	3,967,200

Thanos Merchandising Company
Balance Sheet
For the Year Ended December.31, 2019
Assets	$	Liabilities & Stock holder’s Equity	$
Current Assets:			Current Liabilities:
Cash	33,600		Account payable	168,000
Bank	187,200		Bank loan (1 year)	60,000
Notes receivable	336,000		Unearned service revenue	64,000
Account receivable	136,800		Interest payable	180,000
Office supplies	16,600
Prepaid rent	45,000
Interest receivable	100,000
Total Current Assets		855,200	Total Current Liabilities		472,000
Non-current Assets:			Non-current liabilities:
Land		960,000	Bank loan (5 year)		552,000
Equipment	264,000		Notes payable(3 years)		300,000
Less: Accumulated depreciation	216,000	48,000
Building	480,000		Owner's Equity
Less: Accumulated depreciation	336,000	144,000	Capital	924,000
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