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Topic 4 Class Discussion Question Solution

The document discusses two questions regarding adjusting journal entries. Question 1 provides a general journal with adjusting entries for a business and calculates the adjusted profit. Question 2 provides adjusting entries for a rental services business, calculates the effect on profit and assets/liabilities.

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30 views3 pages

Topic 4 Class Discussion Question Solution

The document discusses two questions regarding adjusting journal entries. Question 1 provides a general journal with adjusting entries for a business and calculates the adjusted profit. Question 2 provides adjusting entries for a rental services business, calculates the effect on profit and assets/liabilities.

Uploaded by

syedimranmasood100
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Topic 4 Preparation of final reports

Class discussion question solutions

Question 1

(a)

S. STEINER
General Journal (INCLUDING GST)
Particulars Debit Credit
1. Interest Receivable 1 920
Interest Revenue 1 920
Adjusting entry to record accrued interest

2. Office Furniture 4 160


Sundry Expenses 4 160
Correct error in recording

3. Rent Receivable 2 816


GST Payable/Collected 256
Rent Revenue 2 560
Rent revenue due

4. S. Steiner, Drawings 1 870


GST Receivable/Paid 170
Vehicle Expenses 1 700
Correcting entry to charge private repairs to drawings

5. Commission Expense 4 480


Commission Payable 4 480
Commission owing to sales representatives

6. Insurance Expense 800


Prepaid Insurance 800
Adjusting entry to record expired insurance

7. Buildings 35 000
Repairs & Maintenance Expense 35 000
Correcting entry on improvement to buildings

8. Depreciation Expense – Building 5 820


Accumulated Depreciation – Building 5 820
Calculation of depreciation on building 2% on
adjusted cost $291 000 = $5820

Page 1 of 3
Depreciation Expense – Office Furniture 6 720
Accumulated Depreciation – Office Furniture 6 720
Calculation of depreciation on office furniture 20% of
$33 600 = $6720
(Do not include June 2019 furniture acquired at the
end of the month as this furniture is brand new and
not yet depreciated.)

(b) Calculation of effect on draft profit:


$64 900 + (1) $1920 + (2) $4160 + (3) $2560 + (4) $1700 – (5) $4480 – (6) $800 + (7)
$35 000 – (8) $5820 – (8) $6720 = $92 420
Adjusted profit = $92 420

Question 2

(a)

BANKSTOWN RENTAL SERVICES


General Journal
Date Particulars Debit Credit
Adjusting entries
June 30
i. Telephone Expense 765.00
GST Receivable/Paid 76.50
Telephone Account Payable 841.50
Telephone bill due.

ii. Depreciation Expense 34200


Accumulated Depreciation 34200
Depreciation on equipment.

iii. Rent Expense 2 110


GST Receivable/Paid 211
Rent Payable 2 321
Rent due on office premises
[2/3 of $3165].

iv. Interest Expense 1 633


Interest Payable 1 633
Accrued interest on bank loan
($70 000 × 0.08 × 3.5/12 = $399).

v. Insurance Expense 2 785


Prepaid Insurance 2 785
Insurance expired

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($2940 × 8/12) + ($6600 × 3/24)=1960+825=2785.

vi. Supplies Expense 7 290


Supplies 7 290
Supplies used. ($1500 + $7100 – $1310)

vii. Unearned Rental Revenue 2 330


Rental Revenue 2 330
Rent precollected and now earned.

viii. Salaries Expense 840


Salaries Payable 840
Salary owing to assistant for 3 days.

(b)
i. Decrease in profit, $47,293
–$765 – $34200 – $2110 – $1633 – $2785 – $7290 + 2330 – $840 = $47293

ii. (a) Decrease in total assets, $43987.50


+$76.50– $34200 + 211 – $2785 – $7290 = $43987.50

(b) Increase in total liabilities, $3305.50


$841.50 + $2 321 + $1633 – $2330 + $840 = $3305.50

(c) Decrease in equity, $47,293


$43987.50 + $3305.50 = $47293

Page 3 of 3

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