Question

The trial balance of Sam Landscaping at 30 June 2019 is as follows:

Sam Landscaping Trial Balance As at 30 June 2019
Account	Debit ($)	Credit ($)
Cash	46,000
Accounts Receivable	48,000
Prepaid insurance	4,800
Landscaping Supplies	12,000
Equipment	25,000
Accumulated Depreciation - Equipment		4,800
Accounts Payable		35,000
Unearned Service Revenue		6,000
Sam L., Capital		50,500
Drawings	3,000
Service Revenue		58,000
Salaries Expense	13,000
Miscellaneous Expense	2,500
Total	$ 154,300	$ 154,300

Additional information for the period:
a. The insurance was purchased on 1 May 2019, and it covers a period of 24 months.
b. A physical count reveals $4,000 of landscaping supplies are on hand at the end of 30 June
c. Equipment is depreciated at a rate of 20% each year
d. $1,600 unearned service revenue was earned
e. Accrued salaries are $3,600


Required:
Prepare relevant adjusting entries. Ignore narrations.

Answer 1

Adjusting Entries
S.No.	Account Titles	Debit $	Credit $
a	Insurance Expense	400
	Prepaid Insurance		400
	( 4,800 x 2/24 )
b	Supplies Expense	8,000
	Landscaping Supplies		8,000
	(12,000 - 4,000 )
c	Assuming - 20% of Cost
	Depreciation Expense	5,000
	Accumulated Depreciation-Equipment		5,000
	( 25,000 x 20% )
	or
	Assuming - 20% of Net Value
	Depreciation Expense	4,040
	Accumulated Depreciation-Equipment		4,040
	( 25,000 - 4,800 ) x 20%
d	Unearned Service Revenue	1,600
	Service Revenue		1,600
e	Salaries Expense	3,600
	Salaries Payable		3,600