As at 30 June 2019, the unadjusted trial balance of Green Ltd was noted as follows: Green Ltd TRIAL BALANCE AS AT 30 JUNE 2019 Accounts Debit ($) Credit ($) Cash at bank 8 985 Account receivables 31 200 Prepaid insurance 3 900 Office Supplies 4 680 Office equipment 14 100 Accumulated depreciation - equipment 2 850 Accounts payable 315 Salary payable Unearned service revenue 1 230 Loan payable 10 500 Capital 33 300 Drawings 60 000 Service revenue 159 270 Salary expenses 66 000 Depreciation expenses - equipment Miscellaneous expenses 18 600 TOTAL 207 465 207 465 The following additional information is available at the end of June for adjustments: A physical count of office supplies on 30 June shows $660 of unused supplies on hand Depreciation of the office equipment is 10% each year (straight line method is used) Of the $1230 unearned service revenue, $300 is still unearned Of prepaid insurance, 60% expired this period Salaries owed but not yet paid $1920 Provided consultancy service of $2000 on credit. This was not recorded for the month. Required: Prepare adjusting entries at the end of 30 June, 2019 Calculate the balance of the total revenue of the company after adjustment Explain why accrual accounting adjustments are require
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
As at 30 June 2019, the unadjusted
Green Ltd
TRIAL BALANCE
AS AT 30 JUNE 2019
Accounts |
Debit ($) |
Credit ($) |
Cash at bank |
8 985 |
|
|
31 200 |
|
Prepaid insurance |
3 900 |
|
Office Supplies |
4 680 |
|
Office equipment |
14 100 |
|
|
|
2 850 |
Accounts payable |
|
315 |
Salary payable |
|
|
Unearned service revenue |
|
1 230 |
Loan payable |
|
10 500 |
Capital |
|
33 300 |
Drawings |
60 000 |
|
Service revenue |
|
159 270 |
Salary expenses |
66 000 |
|
Depreciation expenses - equipment |
|
|
Miscellaneous expenses |
18 600 |
|
TOTAL |
207 465 |
207 465 |
The following additional information is available at the end of June for adjustments:
- A physical count of office supplies on 30 June shows $660 of unused supplies on hand
- Depreciation of the office equipment is 10% each year (
straight line method is used) - Of the $1230 unearned service revenue, $300 is still unearned
- Of prepaid insurance, 60% expired this period
- Salaries owed but not yet paid $1920
- Provided consultancy service of $2000 on credit. This was not recorded for the month.
Required:
- Prepare
adjusting entries at the end of 30 June, 2019 - Calculate the balance of the total revenue of the company after adjustment
- Explain why accrual accounting adjustments are require
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