Below is the trial balance of West Ltd. at December 31, 2020 West Ltd. Trial Balance...
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Below is the trial balance of West Ltd. at December 31, 2020 West Ltd. Trial Balance December 31, 2020 Account Debit Credit Cash $ 50,000 Accounts Receivable 20,000 Prepaid Insurance Supplies Equipment Accumulated Depreciation- Equipment Notes Payable Unearned revenue 4,800 4,000 48,000 $ 4,000 4,400 3,000 Share Capital- Ordinary 72,400 Dividends 2,000 Retained Earnings 25,000 Service Revenue 40,000 Salaries expense Rent expense Utilities expense 10,000 6,000 4,000 Total $ 148,800 $ 148,800 Other data: 1. Supplies on hand at December 31 are $1,000. 2. Accrued Salaries at the end of the December of $2,500 were neither recorded nor paid. 3. The insurance policy was purchased on December 1, 2020 and is for a year. 4. S2,000 of unearned service revenue is recognized for services performed at the end of the month. 5. The interest accrued but not yet recorded or paid on the note payable is $300 for the month of December. 6. The equipment has a 10-year period with no residual value. It is being depreciated at $400 per month. 7. Invoices representing $6,000 of services performed during the month have not been recorded as of December 31. Instructions: 1) Prepare the adjusting entries for the month of December. 2) If each of the above adjustments was not made, show the effect on net income, shareholders equity, assets and liabilities accordingly, by forming a table as shown: Solution: Adjustment no. Type of adjustment Net Equity Assets Liabilities income 1. 2. 3. 4. 5. 6. 7. Use the terms Overstated and Understated. Use N/A for any item that won't be affected by the adjustment. Below is the trial balance of West Ltd. at December 31, 2020 West Ltd. Trial Balance December 31, 2020 Account Debit Credit Cash $ 50,000 Accounts Receivable 20,000 Prepaid Insurance Supplies Equipment Accumulated Depreciation- Equipment Notes Payable Unearned revenue 4,800 4,000 48,000 $ 4,000 4,400 3,000 Share Capital- Ordinary 72,400 Dividends 2,000 Retained Earnings 25,000 Service Revenue 40,000 Salaries expense Rent expense Utilities expense 10,000 6,000 4,000 Total $ 148,800 $ 148,800 Other data: 1. Supplies on hand at December 31 are $1,000. 2. Accrued Salaries at the end of the December of $2,500 were neither recorded nor paid. 3. The insurance policy was purchased on December 1, 2020 and is for a year. 4. S2,000 of unearned service revenue is recognized for services performed at the end of the month. 5. The interest accrued but not yet recorded or paid on the note payable is $300 for the month of December. 6. The equipment has a 10-year period with no residual value. It is being depreciated at $400 per month. 7. Invoices representing $6,000 of services performed during the month have not been recorded as of December 31. Instructions: 1) Prepare the adjusting entries for the month of December. 2) If each of the above adjustments was not made, show the effect on net income, shareholders equity, assets and liabilities accordingly, by forming a table as shown: Solution: Adjustment no. Type of adjustment Net Equity Assets Liabilities income 1. 2. 3. 4. 5. 6. 7. Use the terms Overstated and Understated. Use N/A for any item that won't be affected by the adjustment.
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Related Book For
Horngrens Accounting
ISBN: 978-0133855371
10th Canadian edition Volume 1
Authors: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura, Carol A. Meissner, Jo-Ann L. Johnston, Peter R. Norwood
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