Chris Ting owns a financial planning advisory business operating under the name Top Wealth. The firm prepares
Question:
Chris Ting owns a financial planning advisory business operating under the name Top Wealth. The firm prepares financial statements every month. The unadjusted trial balance of Top Wealth as at 31 August 2021 is shown below (ignore GST). The information below is provided for the month of August:
1. At 31 August, a physical count showed office supplies totalling $6,500 were still on hand.
2. Insurance which covers 1 year was purchased on 1 August 2021.
3. When building was purchased, its useful life was estimated to be 25 years with a residual value of $2,000 at the end of its useful life. The estimation has not changed. Straight-line method is used.
4. The amount of the unearned service revenue represents pre-collected fees from clients for services to be performed. 20% of the services have been performed in August.
5. On 20th August, Top Wealth signed an agreement to provide financial planning services to a client for a monthly fee of $1,300. It has been agreed that the fee is to be received on the 20th day of the following month. The service for the month of August was performed before 31 August. No entry was recorded when the agreement was signed.
6. Interest for a 5-year bank loan is to be paid at the end of each financial year ending 30 June. Interest on bank loan is 8% per annum.
Required:
a. Prepare necessary adjusting entries at the end of month August (round your calculations to the nearest dollar amount).
b. What is the balance of ?cash at bank? and ?prepaid insurance? after the adjusting entries are recorded?
Accounting
ISBN: 978-0176509743
Volume 1, 2nd canadian Edition
Authors: Carl warren, James Reeve, Jonathen Duchac, Sheila Elworthy,