Please explain how interest expense changes on the adjusted trial balance and show work out of the answer The problem to be resolved:The following trial balance was extracted from the books ofMovies To The Max Ltd at December 31, the end of thecompany's financial year. The company is owned by SamuelMaximo and is in the business of buying and selling movieson tapes.Trial Balance as at July 31, 2021Trial BalanceA/C NameCashAccounts receivableAlowance for bad debtMerchandise InventoryStore SuppliesPrepaid RentComputer and EquipmentAccumikted depreciation -Computer and EquipmentDelivery TruckAccumukted depreciation - Delivery TruckAccounts payableWages payabeUneamed Sakes revenueNotes Payable, Long TermSamuel Maximo, CapitalSamuel Maximo, WithdrawakSaks reveneDRCR750,000290,50025,0000167.050120,000510,0001,200,0001,900,000150,000400,000150,0001,000,0002,500,000105,0002,833,580Sakes discountSaks retums and alowancesCost of goods sold73,25052,100495,000325,125Wages ExpenseRent ExpenseDepreciation Expense - Computer and EquipmentDeprecistion Experse -Delivery TruckStore Supplies ExpenseUtlities ExpenseBad Debt ExpenseInterest ExpenseTotal680,00065,000220,000105,5557,058,5807,058,580The following additional information is available at July 31,2021:(i) Insurance of $510,000 was paid on April 1, 2021, for six(6) -months to February 2022.(ii) The computer and equipment were purchased onDecember 1, 2020 and have an estimated useful life of10 years. This asset is depreciated on the double-declining depreciation method down to a residualvalue of $100,000.(iii) The company has two deliver trucks and uses the unitsof production method to compute the depreciationcharges. One of the trucks was purchased for $800,000on August 1, 2018, and is recognized as truck A. Theother which is recognized as truck B was purchasedfor $1,100,000 on October 1, 2020. The expecteduseful life of both truck is ten (10) years or 120,000miles. And the residual value on both trucks is$200,000. In the 2018/2019 financial year truck Adrove 12,000 miles, 18,000 miles in 2019/2020, and21,000 miles in 2020/2021. Truck B drove 8,000 milesin 2020/2021.(iv) Wages earned by employees NOT yet paid amountedto 23,050 at July 31, 2021.(v) A physical count of inventory at July 31, 2021 reveals$165,070 worth of inventory on hand.(vi) At July 31, 2021 $105,000 of the previously unearnedsales revenue had been earned.(vii) The aging of the Accounts Receivable schedule at July31, 2021 indicated that the estimated uncollectible onaccount receivable should be $29.050.REQUIRED: (A-F)a) Prepare the necessary adjusting journal entries on July 31,2021. [Narrations are not required]b) Prepare Columbus Ltd multiple-step income statement forthe year ended July 31, 2021.c) Prepare Columbus Ltd statement of owner's equity for theyear ended July 31, 2021.d) Prepare Columbus Ltd classified balance sheet at July 31,2021.e) Prepare the closing entries) Prepare the post-closing trial balance 2. Adjusted Trial Balance -The Max LtdAdjusted Trial BalanceAt July 31, 2021Accounts TitleDebitCredit$ 750,000$ 290,000CashAccounts receivableAllownace for bad debt$29,050Merchandise InventoryStore Supplies$ 165,070$ 120,000$ 170,000Prepaid RentComputer and Equipment$1,200,000$ 160,000Accumulated depreciation - Computer and equipmentDelivery TruckAccumulated depreciation - Delivery Truck$1,900,000$ 315,000$ 400,000AccoableWages payable23,050$ 45,000$1,000,000Unearned Sales revenueNotes Payabe, Long termSamuel Maximo, Capital$2,500,000Samuel Maximo, Withdrawals$ 105,000Sales revenue$2,938,580Sales discount73,250$ 52,100$ 496,980$ 348,175$1,020,000$ 160,000$ 165,000$ 65,000$ 220,000Sales returns and allowancesCost of goods soldWages expenseRent ExpenceDepreciation expense - Computer and EquipmentDepreciation expense -Delivery truckStore Supplies expenseUtilities ExpensesBad debt expense$4,050Interest expense$ 106,055Total$7,410,680 $7,410,680

Adjusted Trial Balance Adjusted Trial balance which has to incurred to make the adjustment entries…

Answered: Please explain how interest expense…

Business

Accounting

Please explain how interest expense changes on the adjusted trial balance and show work out of the answer

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter6: Business Expenses

Section: Chapter Questions

Problem 44P

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