Question

Following is a list of financial statement items from Chunky Candy Company as of June 30, 2010. Chunky’s fiscal year is from July 1 to June 30.
Prepaid insurance ......... $ 3,600
Prepaid rent ............ 5,000
Wages expense .......... 12,000
Unearned revenue .......... 30,000
Interest expense .......... 0
Additional information follows:
• The company paid a $3,600 premium on a three-year insurance policy on January 1, 2010, with the insurance coverage beginning immediately.
• Chunky borrowed $100,000 on July 1, 2009, with an interest rate of 11%. No interest has been paid as of June 30, 2010.
• The books show that $10,000 of the unearned revenue has now been earned.
• The company paid 10 months of rent in advance on March 1, 2010, for rent beginning in March.
• Wages for June 30, 2010, of $1,000 will be paid to employees on July 3, 2010 (the next fiscal year).

Requirements
1. Use the accounting equation to record the adjustments that must be made prior to the preparation of the financial statements for the fiscal year ended June 30, 2010.
2. For the accounts shown, calculate the balances that would appear on the financial statements for the year ended June 30, 2010; balance sheet at June 30, 2010.



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  • CreatedSeptember 01, 2014
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