Question

Journalize the following adjustments.

(1)		Services performed for customers through February 27, 2017, but unbilled and uncollected were $4,330.
(2)		Received notice that a customer who was billed $230 for services performed February 10 has filed for bankruptcy. Teal Mountain does not expect to collect any portion of this outstanding receivable.
(3)		Teal Mountain uses the allowance method to estimate bad debts. Teal Mountain estimates that 3% of its month-end receivables will not be collected.
(4)		Record 1 month of depreciation for the floor equipment. Use the straight-line method, an estimated life of 4 years, and $800 salvage value.
(5)		Record 1 month of insurance expense.
(6)		An inventory count shows $460 of supplies on hand at February 28.
(7)		One week of services were performed for the customer who paid in advance on February 17.
(8)		Accrue for wages owed through February 28, 2017.
(9)		Accrue for interest expense for 1 month.
(10)		Karen estimates a 20% income tax rate. (Hint: Prepare an income statement up to “income before taxes” to help with the income tax calculation.)

Answer 1

			TEAL MOUNTAIN
JOURNAL ENTRIES FOR THE MONTH OF FEBUARY 2017
1)	27.02.2017		CUSTOMER (ACCOUNT RECEIVABLE)A/C	DR	$4330
			TO SERVICES A/C			$4330
			(BEING SERVICES PROVIDED TO CUSTOMER)
2)	10.02.2017		BAD DEBTS A/C	DR	$230
			TO CUSTOMER (ACCOUNT RECEIVABLE)A/C			$230
			(BEING AMOUNT NOT RECOVERABLE FROM
			CUSTOMER TREATED AS BAD DEBTS)
3)			PROVISION FOR BAD DEBTS A/C		$
			TO CUSTOMER (ACCOUNT RECEIVABLE)A/C			$
			(BEING 3% ALLOWANCE MADE FOR BAD DEBTS
4)			DEPRECIATION A/C	DR	$
			TO FLOOR EQUIPMENT A/C			$
			(BEING DEPRECIATION CHARGED FOR THE
			MONTH OF FEB)
5)			INSURANCE EXPENSE A/C	DR	$
			TO CASH			$
			(BEING INSURANCE EXPENSE INCURRED)
6)			CLOSING STOCK A/C	DR	$460
			TO PROFIT AND LOSS A/C			$460
			(BEING CLOSING STOCK RECORDED)
7)			CASH A/C	DR	$
			TO ADVANCE RECEIVED FROM CUSTOMERS A/C			$
			(BEING ADVANCE RECEIVED FROM CUSTOMERS)
8)	28.02.2017		WAGES A/C	DR	$
			TO WAGES PAYABLE			$
			(BEING WAGES ACCRUED FOR THE MONTH)
9)			INTEREST EXPENSE A/C	DR	$
			TO EXPENSE PAYABLE			$
			(BEING INTEREST ACCRUED FOR THE MONTH)
10)			INCOME TAX PROVISION A/C	DR	$
			TO PROFIT AND LOSS A/C			$
			(BEING INCOME TAX PROVIDED)
(SINCE FULL INFORMATION ABOUT AMOUNTS AND DATES NOT AVAILABLE , SOME AMOUNTS AND DATES HAVE BEEN IGNORED IN JOURNAL ENTRIES)