TASK: Below are eight adjusting entries that need to be made at the end of the month (November). Provide accurate journal entries for each of these adjustments.

Chart of Accounts:

 
 

Transcribed Image Text:

Spicemup BV is a small private corporation. It imports hot sauces from around the globe and sells these to consumers and businesses in the Netherlands through its webshop. Spicemup BV was established in January 2016. The corporation currently has two full time employees: Tina Tabasco and Jeanette Adjuma. Spicemup BV has three owners: 40% of its 1,0000 shares are owned by Tina Tabasco, another 40% are owned by Tina's parents, Juan and Marieke Tabasco, and the remaining 20% are owned by a private equity firm called Firepower Investments Inc. Spicemup BV accounts for its results on a monthly basis. It uses a perpetual inventory system based on a FIFO cost flow assumption. Below is the Statement of Financial Position of Spicemup BV per October 31, 2022. Assets Refrigerators Accumulated Depreciation Refrigerators IT system Accumulated Depreciation IT system Inventory Prepaid Insurance Supplies Accounts Receivable Allowance for Doubtful Accounts Investments at fair value Cash Total Assets 31/Oct 90,000 -46,500 12,000 -3,750 24,000 400 650 2,300 -300 5,800 5,000 89,600 Liabilities Note Payable Accounts Payable Interest Payable Salaries and Wages Payable Unearned Revenue Equity Share Capital - Ordinary Share Premium - Ordinary Treasury Shares Retained Earnings Total Liabilities and Equity Additional information: Both the refrigerators and the IT system are depreciated using the straight-line method. The refrigerators were purchased on September 1, 2017 and are depreciated in 120 months assuming a residual value of 0. The IT system was purchased on August 1 2021 and is depreciated in 36 months, assuming a residual value of 3,000. The investments refer to a portfolio of trading shares. The cost of the portfolio was 2,500. Spicemup BV records fair value adjustments on a special account "Fair Value Adjustment - Trading" and recognizes the unrealized gain or loss in its monthly income. Prepaid insurance refers to the remaining deferral of a one-year fire insurance for the whole of 2022, purchased in December 2021. Notes payable refers to a 20,000 2-year loan. The note was signed on July 1, 2021 and was used to finance the purchase of the IT system, among other things. It will need to be paid back on July 1 2023. The interest rate is 3%. Interest is payments are made twice per year, on January I and on July 1. 31/Oct 20,000 1,800 400 4,000 900 40,000 12,000 0 10,500 89,600 Spicemup BV is a small private corporation. It imports hot sauces from around the globe and sells these to consumers and businesses in the Netherlands through its webshop. Spicemup BV was established in January 2016. The corporation currently has two full time employees: Tina Tabasco and Jeanette Adjuma. Spicemup BV has three owners: 40% of its 1,0000 shares are owned by Tina Tabasco, another 40% are owned by Tina's parents, Juan and Marieke Tabasco, and the remaining 20% are owned by a private equity firm called Firepower Investments Inc. Spicemup BV accounts for its results on a monthly basis. It uses a perpetual inventory system based on a FIFO cost flow assumption. Below is the Statement of Financial Position of Spicemup BV per October 31, 2022. Assets Refrigerators Accumulated Depreciation Refrigerators IT system Accumulated Depreciation IT system Inventory Prepaid Insurance Supplies Accounts Receivable Allowance for Doubtful Accounts Investments at fair value Cash Total Assets 31/Oct 90,000 -46,500 12,000 -3,750 24,000 400 650 2,300 -300 5,800 5,000 89,600 Liabilities Note Payable Accounts Payable Interest Payable Salaries and Wages Payable Unearned Revenue Equity Share Capital - Ordinary Share Premium - Ordinary Treasury Shares Retained Earnings Total Liabilities and Equity Additional information: Both the refrigerators and the IT system are depreciated using the straight-line method. The refrigerators were purchased on September 1, 2017 and are depreciated in 120 months assuming a residual value of 0. The IT system was purchased on August 1 2021 and is depreciated in 36 months, assuming a residual value of 3,000. The investments refer to a portfolio of trading shares. The cost of the portfolio was 2,500. Spicemup BV records fair value adjustments on a special account "Fair Value Adjustment - Trading" and recognizes the unrealized gain or loss in its monthly income. Prepaid insurance refers to the remaining deferral of a one-year fire insurance for the whole of 2022, purchased in December 2021. Notes payable refers to a 20,000 2-year loan. The note was signed on July 1, 2021 and was used to finance the purchase of the IT system, among other things. It will need to be paid back on July 1 2023. The interest rate is 3%. Interest is payments are made twice per year, on January I and on July 1. 31/Oct 20,000 1,800 400 4,000 900 40,000 12,000 0 10,500 89,600

Answer rating: 100% (QA)

Spicemup BV Adjusting Journal Entries November 1 Salaries and Wage Expense Date Account Dr EUR Cr EU... View the full answer