Melomania provides services to customers. The following is an extract of the unadjusted trial balance of this business at the end of its financial year ended 31December 2021:

	DEBIT $	CREDIT $
Prepaid advertising	30,000
Materials on hand	6,000
Prepaid rent	8,000
Term deposit
Accumulated depreciation - Computers		10,000
Fees income		218,000
Prepaid income		30,000
Term deposit	50,000
Equipment	20,000
Accumulated depreciation- Equipment		5,000
Electricity expense	12,000
Computers	40,000

The following information needs to be taken into account at the end of the financial year:

1. $600 is owing for electricity supplied in December 2021.
2. $30,000 advertising was prepaid on 1 October 2021 for the period ended 31 March 2022.
3. A fee for work performed on account (credit) in December for $800 has not been recorded.
4. The equipment has a useful life of 5 years and no scrap value. It is depreciated using the straight line method.
5. The term deposit of $50,000 was invested on 1 November 2021 for 6 months at 3% interest per annum.
6. 15 % of the prepaid income balance has been earned by 31 December 2021.
7. The computers have an estimated life of 4 years and are depreciated using the diminishing value (reducing balance) method.
8. At the end of the year, materials on hand are $2,000.

Answer rating: 100% (QA)

Journal entry Date particulars Debit Credit 1 Electricity expense 600 Os electricity expe... View the full answer