You are working with Complete Business Services on the year-end adjustments for one of your clients, Milo
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Question:
You are working with Complete Business Services on the year-end adjustments for one of your clients, Milo Ltd. You are required to comply with the following information given by the client to finalise the year-end adjustment entries:
Ledger Account balances (prior to any Balance Day Adjustments) as of 30 June 2018:
Insurance | $ 2,400.00 |
Rent | $ 1,800.00 |
Interest Income | $ 1,400.00 |
Plant | $ 10,000.00 |
Accumulated Depreciation | $ 6,000.00 |
Accounts Receivable | $ 5,550.00 |
Allowance for Doubtful Debts | $ 200.00 |
Additional Information
- On 1 December 2017 a one-year insurance premium was paid for $2,400 plus GST. Insurance cover starts on 1 December
- Rent paid in advance $150 on 30 June 2018
- Interest earned but not received $350 on 30 June 2018
- Depreciation to be provided $1,000 on 30 June 2018
- Bad Debts to be written off $500 plus $50 GST on 30 June 2018
- Allowance for Doubtful Debts to be adjusted to 5.5% of Accounts Receivable
- Physical count on 30 June 2018 reveals inventory value of $68,000 and the perpetual records show inventory value $70,000. Milo Ltd uses a perpetual inventory system.
Task 8
Prepare general journal entries for the balance day adjustments, reversing general journal entries (for some accounts only) on 1 July 2018, and adjustment entries to record inventory variance.
Note: you need to provide the narration/description in each journal entry.
Related Book For
Auditing An International Approach
ISBN: 978-0071051415
6th edition
Authors: Wally J. Smieliauskas, Kathryn Bewley
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