Question

Question 3:
Sun Consultancy provides special consultancy services to its clients. It started its operation on January 1, 2018. An un-adjusted trial balance as on May 31, 2018 for this firm is given below.
Sun Consultancy
Trial Balance
As on May 31, 2018
Serial # List of Accounts Debit (Rs) Credit (Rs)
1 Cash 97,300
2 Accounts receivable 10,400
3 Office supplies 15,000
4 Prepaid insurance 12,000
5 Furniture 40,000
6 Car 50,000
7 Accumulated depreciation-car 7,600
8 Unearned revenue 1,760
9 Drawings 2,000
10 Capital 150,000
11 Service revenue 37,300
12 Accounts payable 7,600
13 Loan payable 50,000
14 Salaries expense 9,000
15 Depreciation expense 1,560
16 Rent expense 17,000
Total 254,260 254,260

Following additional information is revealed for adjustments at May 31, 2018;
1. Office supplies of Rs 7,600 were consumed during month.
2. Salaries earned by employees for second half of May Rs 9,000 were neither paid not recorded.
3. Rs 2,500 of prepaid insurance was expired during the month but was not recorded.
4. Accounts payable were paid 1/2 during May but no entry was made in the books.
5. Remaining balance of unearned revenue was Rs 1,200 at the end of the month.
6. Cash received Rs 4,400 from account receivable but not recorded.
7. The interest rate on Loan payable is 15% (The Loan was taken out on April 1.)
8. Invoices representing Rs 4,600 of services performed during the month have not been recorded.

REQUIRED
1. Prepare adjusting entries at May 31, 2018.

Answer 1

Adjustment Entries
Date		Account Name	Debit	Credit
May 31-2018	1	Supplies exp A/c    Dr	7600
		To Office Supplies		7600
	2	Salary Exp A/c    Dr	9000
		To Salary Payable		9000
	3	Insurance Exp A/c     Dr	2500
		To Prepaid Insurance		2500
	4	Accounts Payable A/c    Dr	3800
		To Office supplies		3800
	5	Unearned Revenue A/c    Dr	560
		To Service revenue		560
	6	Service Revenue A/c    Dr	4400
		To Accounts receivale		4400
	7	Interset on Loan A/c    Dr	1250
		To Interest Payable		1250
	8	Uneared revenue A/c    Dr	4600
		To service revenue		4600