3 of 4(c) Examine the above Unadjusted- and Adjusted Trial Balances. Calculate and describe allJournal Entries that would underlie the 2020 Adjusting Entries that relate to the followingtwo transactions:31 Dec 2020, ABC Puzzle company has not yet paid salaries for Dec 2020 in theamount of €15,00001 Aug 2020, the ABC company has issued a promissory note (part of notes payable)for €15,000 with an annual interest rate of 10% (maturity date: 01 February 2021). 2 of 4Question 1The ABC Puzzle company is a merchandising company that buys and sells puzzles. The company'send of 2020 Unadjusted- and Adjusted Trial Balances are as shown below. You have recently joinedthe ABC Puzzle's accounting department. Your supervisor asks you to take a closer look at theprepared Trial Balances before they are presented to the CFO.131 Dec 2020Unadjusted Trial BalanceAdjusting EntriesAdjusted Trial BalanceAccountsDebitCreditDebitCreditDebitCreditCash€ 120,000€ 120,000Accounts Receivable100,000100,000Notes Receivable15,00015,000Interest Receivable€ 1,5001,500Merchandise Inventory130,000130,000Prepaid Insurance2,000€ 1,0001,000Land70,00070,000Buildings & EquipmentAccumulated Depreciation350,000350,000€ 115,00045,000€ 160,000Accounts PayableNotes payableSalaries PayableInterest PayableDividends PayableBond payables180,000180,00025,00025,00015,00015,0001,2001,20020,00020,000100,000100,000Common stock(=Ordinary Share Capital)Additional Paid-in Capital(=Share Premium)Retained Earnings180,000180,00030,00030,00040,00040,000Sales Revenue600,000600,000Interest Revenue1,5001,500Rent Revenue10,00010,000Cost of Goods Sold408,000408,000Advertising ExpenseSalaries Expense20,00020,00080,00015,00095,000Interest Expense5,0001,2006,200Insurance Expense1,0001,000Depreciation Expense45,00045,000Totals1,300,0001,300,00063,70063,7001,362,7001,362,700

Adjusting entries: These are the journal entries that are passed by an accountant to match or…

(c) Examine the above Unadjusted- and Adjusted Trial Balances. Calculate and describe all Journal Entries that would underlie the 2020 Adjusting Entries that relate to the following two transactions: 31 Dec 2020, ABC Puzzle company has not yet paid salaries for Dec 2020 in the amount of €15,000 01 Aug 2020, the ABC company has issued a promissory note (part of notes payable) for €15,000 with an annual interest rate of 10% (maturity date: 01 February 2021).

(c) Examine the above Unadjusted- and Adjusted Trial Balances. Calculate and describe all Journal Entries that would underlie the 2020 Adjusting Entries that relate to the following two transactions: 31 Dec 2020, ABC Puzzle company has not yet paid salaries for Dec 2020 in the amount of €15,000 01 Aug 2020, the ABC company has issued a promissory note (part of notes payable) for €15,000 with an annual interest rate of 10% (maturity date: 01 February 2021).

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter2: The Accounting Information System

Section: Chapter Questions

Problem 63.1C

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