Please show working of how rent expense and prepaid rent were calculated on adjusted trial balance 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 movies ontapes.Trial Balance as at July 31, 2021Trial BalanceA/C NameDRCRCashAccounts receivableAllowance for bad debtMerchandise InventoryStore SuppliesPrepaid RentComputer and EquipmentAccumulated depreciation -Computer and EquipmentDelivery TruckAccumulated depreciation - Delivery TruckAccounts payableWages payableUneamed Sales revenueNotes Payable, Long TermSamuel Maximo, CapitalSamuel Maximo, WithdrawakSales revenueSales discountSales returns and allowancesCost of goods soklWages ExpenseRent ExpenseDepreciation Expense - Computer and EquipmentDepreciation Expense -Delivery TruckStore Supplies ExpenseUtilities ExpenseBad Debt ExpenseInterest ExpenseTotal750.000290.50025,000167,050120,000510,0001,200,0001,900,000150,000400,000150,0001,000,0002,500,000105,0002,833,58073,25052,100495.000325.125680,00065,000220,000105,5557,058,5807.058.580The following additional information is available at July 31,2021:(1) Insurance of $510,000 was paid on April 1, 2021, for six(6) -months to February 2022. 1. Adjusting Entries -2. Adjusted Trial Balance -The Max LtdThe Max LtdAdjusting EntriesAdjusted Trial BalanceAt July 31, 2021DateAccounts TitleDebitCreditJul 31 Rent ExpensePrepaid Rent$ 340,000Accounts TitleDebitCredit$ 340,000$ 750,000$ 290,000Cash(To record insurance Expense incurred)($510,000/6 Month X 4 Months)Accounts receivableAllownace for bad debt$ 29,050Depreciation expense - Computer and EquipmentAccumulated depreciation - Computer and equipment(To record depreciation Expense incurred)$1,200,000/10 Years X 8/12 Months X 2Merchandise InventoryStore SuppliesPrepaid RentComputer and EquipmentAccumulated depreciation - Computer and equipment$ 165,070$ 120,000$ 170,000Jul 31$ 160,000$ 160,000$1,200,000$ 160,000Delivery TruckAccumulated depreciation - Delivery TruckAccounts payableWages payable$1,900,000$ 315,000$ 400,000$ 23,050$ 45,000Jul 31 Depreciation expense-Delivery TruckAccumulated depreciation - Delivery Truck$ 165,000$ 165,000(To record depreciation expense incurred)($800,000-$200,000)/120,000 X 21,000)+($1,100,000-$200,000)/120,000 X 8,000)Unearned Sales revenueNotes Payabe, Long termSamuel Maximo, Capital$1,000,000$2,500,000Jul 31 Wages expense$ 23,050Samuel Maximo, Withdrawals$ 105,000Wages payable$ 23,050Sales revenue$2,938,580(To record wages expense incurred)$ 73,250$ 52,100$ 496,980Sales discountSales returns and allowancesJul 31 Cost of goods soldMerchandise Inventory1,980Cost of goods soldWages expense241,980$ 348,175$1,020,000$ 160,000$ 165,000$ 65,000$ 220,000(To record inventory valued at Net realizable value)Rent ExpenceDepreciation expense - Computer and EquipmentJul 31 Unearned Sales revenueSales Revenue$ 105,000Depreciation expense -Delivery truck$ 105,000Store Supplies expense(To record unearned revenue earned)Utilities ExpensesBad debt expensePhotoChd3,050Jul 31 Bad debt expenseAllownace for bad debt4,050Interest expense2$4,050(To record bad debt Expense incurred)Total$7,410,680 $7,410,680

The adjustment entries are prepared to adjust the revenue and expenses for the current period.

Answered: Please show working of how rent expense…

Business

Accounting

Please show working of how rent expense and prepaid rent were calculated on adjusted trial balance

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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