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Adjusting Journal Entries for 2010

This document provides information about adjusting journal entries needed for various situations: a) Depreciation expense of Rs. 16,000 is calculated for machinery using the cost method. b) Prepaid insurance has a Rs. 9,000 balance, but Rs. 3,000 remains unexpired. c) Office supplies had Rs. 600 balance on 1/1, Rs. 2,600 purchased, but only Rs. 500 remains on 12/31. It provides details on adjustments needed for various account balances and expenses.

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Glomarie Gonayon
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272 views2 pages

Adjusting Journal Entries for 2010

This document provides information about adjusting journal entries needed for various situations: a) Depreciation expense of Rs. 16,000 is calculated for machinery using the cost method. b) Prepaid insurance has a Rs. 9,000 balance, but Rs. 3,000 remains unexpired. c) Office supplies had Rs. 600 balance on 1/1, Rs. 2,600 purchased, but only Rs. 500 remains on 12/31. It provides details on adjustments needed for various account balances and expenses.

Uploaded by

Glomarie Gonayon
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd

Problem # 17.

7: Prepare adjusting journal entries for the year ended December 31, 2010, for each of
these separate situations. Assume that prepaid expenses are initially recorded in asset accounts. Also
assume that fees collected in advance of work are initially recorded as liabilities

a. Depreciation on the company’s machinery is computed to be Rs.16,000 by cost method

b. The prepaid Insurance account had a Rs. 9,000 debit balance at December 31, 2010, before adjusting
for the costs of any expired coverage. An analysis of the company’s insurance policies showed that Rs.
3,000 of unexpired insurance coverage remains

c. The office supplies account had Rs. 600 debit balance on January 1, 2010; and Rs. 2,600 of the supplies
was purchased during the year. The December 31, 2010, physical count showed Rs. 500 of the supplies
available

d. One half of the work related to Rs. 10,000 received in advance was performed during the period

e. Interest expenses of Rs.3,500 have been incurred but are not paid as of December 31, 2010

f. On December 31, of the current year, a company’s unadjusted trial balance revealed the following:
Accounts receivable of Rs. 185,600; and Allowance for Doubtful Accounts of Rs. 1,600 (credit balance).
Prepare the adjusting journal entry to record the estimate for bad debts, assuming 6% of the accounts
receivable balance is assumed to be uncollectible

Solution:

adjusting entries
Problem # 17.8: AR Khan Country Club adjusts its accounts monthly and closes its accounts annually.
Club members pay their annual dues in advance by January 4. The entire amount is initially credited to
Unearned Membership Dues. At the end of each month, an appropriate portion of this amount is
credited to Membership Dues Earned. The following information is available as a source for preparing
adjusting entries at December 31, 2016:

1. Salaries earned by club’s employees that have not yet been recorded or paid amount to Rs. 17,500

2. Membership dues earned in December, for collections received in January, amount to Rs. 80,000

3. Depreciation of the country club’s equipment is based on an estimated life of 10 years by WDM. The
equipments had originally been purchased for Rs. 180,000. The straight-line method is used

4. A 12-month bank loan in the amount of Rs. 50,000 had been obtained by the country club on October
1. Interest is computed at an annual rate of 12%. The entire Rs. 50,000, plus all of the interest accrued
over the 12-month life of the loan, is due in full on September 30 of the upcoming year. The necessary
adjusting entry was made on November 30 to record the first two months of accrued interest expense.
However, no adjustment has been made to record interest expense accrued in December

5. A one-year property insurance policy had been purchased on March 31. The entire premium of Rs.
2,400 was initially recorded as Unexpired Insurance

6. Unrecorded Income Taxes Expense accrued in December amounts to Rs. 1,700. This amount will not
be paid until January 15

Solution:

adjustment entries

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