Case Tx Inc. (B) - Solution

CASE TX inc. (B) - solution

4) Prepare adjusting entries required on April 30, 20X1.

Date

k

l

Folio

Debit

Credit

Personal expense paid by personal credit

card. Business entity principle.

No adjustment needed.

April 30

Telephone

100

@ Accounts Payable

m

April 30

Honorarium

100

250

@ Accounts Payable

250

750 - 500 = 250

n

April 30

Deferred Charges - Organization Expense

1 800

@ Accounts Payable

Amortization

1 800

15

@ Acc. Amort. - Def. Ch. - Org. Exp

15

1 800 / 10 years = 180 / 12 months = 15

o

April 30

Prepaid Expense - Office Supplies

@ Office Supplies - Expenses

300

300

or could also use

Office Supplies

150

@ Prepaid - Off Supplies

150

p

No adjustment needed.

q

No adjustment needed.

© August 19, 2009 - François Brouard, DBA, CA

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CASE TX inc. (B) - solution

Date

r

Folio

Bank Charges

Debit

Credit

20

@ Cash

a

b

20

Prepaid rent should be equal to $500.

April 30

Insurance

200

@ Prepaid Expense - Insurance

200

2 400 x 1/12 = 200 or 2 400 - 200 = 2 200

or could also use

Prepaid Exp - Insurance 2 200

@ Insurance

2 200

g

April 30

Interest

@ Accruals Payable

41

41

10 000 x 10% x 15 / 365 = 41

© August 19, 2009 - François Brouard, DBA, CA

2 / 10

CASE TX inc. (B) - solution

5) Post each adjusting entries to the appropriate ledger accounts (use T-account format).

Cash

bal

1 850

r

bal

20

1 830

Accounts receivable

bal

Allowance for Doubtful Accounts

800

bal

Prepaid Expenses - Insurance

bal

bal

Prepaid Expenses - Rent

2 400

c

bal

500

bal

500

200

2 200

Prepaid Expenses - Office Supplies

bal

0

0

Land

bal

10 000

bal

10 000

300

bal

300

Office Equipment

bal

0

Acc. Amort. - Office Equipment

bal

Computer Equipment and Software

bal

0

© August 19, 2009 - François...