Question: Question 2 (30 marks) Required: Prepare the proper ADJUSTING journal entries for the following events. Also, prepare a balance sheet after adjusting entries have been
Question 2 (30 marks)
Required: Prepare the proper ADJUSTING journal entries for the following events. Also, prepare a balance sheet after adjusting entries have been made.
The unadjusted trial balance for Tahini & Jam Inc. appears below:
Tahini & Jam Inc.
Unadjusted Trial Balance
December 31, 2020
Debit Credit
Cash $75,500
Accounts receivable 5,000
Prepaid rent 1,000
Prepaid insurance 15,000
Supplies 3,000
Equipment 40,000
Accumulated depreciation-equipment $4,000
Accounts payable 11,000
Bank loan payable 10,000
Unearned service revenue 10,500
Common shares 48,250
Retained earnings 32,000
Dividends 5,000
Service revenue 44,600
Salary expense 7,200
Utilities expense 1,200
Rent expense 5,250
Advertising expense 2,200 ________
$160,350 $160,350
Additional data is as follows. Record the adjusting entry below the information.
- Unearned service revenue NOT YET earned at year end, $2,000.
Dr.
Cr.
- Depreciation for the current year amounts to $4,500.
Dr
Cr.
- Prepaid insurance consists of a policy purchased on January 1, 2020 for a 15 months coverage.
Dr.
Cr.
- Supplies on hand/counted at year end amount to $1,200.
Dr.
Cr.
- Accrued salaries on December 31, 2020, amount to $2,500.
Dr.
Cr.
- The bank loan was received on March 1, 2020, and the annual interest rate was 12%.
Dr.
Cr.
- Rent is $500/month, and January, 2021 rent is included in the trial balance amount.
Dr.
Cr.
- Corporate income tax is 20% of net income before tax.
Dr.
Cr.
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