Mr. Josh Edinburgh started a company titled “Ryerson Computers” that specialized in computer equipment and accessories. In the month of January 2020, the following transactions took place:

January 1: The owner personally borrowed $100,000 from a bank. He invested money in the business.

January 2: Purchase of specialized equipment $15,000. 50% of this amount was paid in cash and the remaining was on credit.

January 3: Rented an office space for conducting administrative activities. The office will cost $5000 per month.

January 5: Purchase 3-year insurance policy for $15,000.

January 6: Purchased office supplies $10,000. No cash was paid for the transaction.

January 7: Placed an order for computer parts worth $5000 to a local supplier. The supplier will deliver the parts in May.

January 8: Made an advertisement in Facebook. The advertisement cost $1000. The entire amount was settled in cash.

January 8: Hired 3 employees for the office. Each will be paid $1000 per month.

January 10: Sold 5 computers for $100,000. 60% of this amount was received in cash and the remaining on credit.

January 12: Advance cash of $5000 was received for computer parts to be delivered in March, 2020.

January 15: The office rent, $5000, was paid in cash. Employees’ salary $3000 incurred and was paid

in cash.

January 20: 50% of all of the accounts payable due in January was paid in cash.

January 30: Owner Withdrew $1000 from the business.

January 31: Sold 10 computers for $50,000. No cash was received for this transaction.

January 31: Borrowed $50,000 from the bank @12% per year interest rate.

List of account titles to be used: Owner’s capital, Cash, Equipment, Accounts Payable, Prepaid Insurance, Advertisement expense, Rent Expense, Salaries and wages expense, Bank Loan, Sales Revenue, Unearned Sales Revenue, Owner’s drawing, Supplies.

Requirements:

1. Prepare Journal entries based on the transactions listed above for January, 2020.
2. Post the journal entries to the ledger accounts
3. Prepare a trial-balance at January 31, 2020.
4. Prepare adjusting entries based on the following information at the end of March 31,2020:

1. The equipment has useful life of 5 years with a salvage value of $5000.
2. $5000 of the office supplies has been used.
3. Prepaid insurance expired for 3 months.
4. 50% of the unearned sales revenue has been earned.
5. Interest accrued on bank loan.
6. Salaries accrued for $2000, but not paid.

List of accounts to be used for adjusting entries: Depreciation expense, Accumulated depreciation-equipment, Supplies expense, Insurance expense, Interest expense, Interest payable, salaries and wages payable.

Note: Adjusting entries are prepared quarterly.

5. Prepare adjusted trial balance at March 31, 2020.

Answer rating: 100% (QA)

Journal Ledger before adjustments as on 31st ... View the full answer