The following accounts were taken from ABC Companys unadjusted trial balance at
ID: 2502545 • Letter: T
Question
The following accounts were taken from ABC Companys unadjusted trial balance at December 31, 2008: Accounts Payable ............ $58,000 Accounts Receivable ......... $64,000 Accumulated Depreciation .... $27,000 Advertising Expense ......... $14,000 Building .................... $81,000 Cash ........................ $30,000 Contributed Capital ......... $94,000 Cost of Goods Sold .......... $45,000 Dividends ................... $12,000 Equipment ................... $68,000 Income Tax Expense .......... $17,000 Interest Revenue ............ $36,000 Inventory ................... $62,000 Notes Payable ............... $82,000 Prepaid Insurance ........... $18,000 Rent Expense ................ $10,000 Retained Earnings ........... $67,000 (at January 1, 2008) Sales Revenue ............... $99,000 Salaries Expense ............ $22,000 Salaries Payable ............ $11,000 Trademark ................... $31,000 ABC Company has not yet recorded adjusting entries related to the following three items: (1) The prepaid insurance in the unadjusted trial balance relates to a two-year insurance policy purchased on September 1, 2008. (2) ABC Company earned $10,000 of rental revenue during the last week of December that has not been recorded or collected. The $10,000 will be collected during the first week of January, 2009. (3) Depreciation expense of $4,000 has not yet been recorded. Calculate the total current assets reported in ABC Company's balance sheet at December 31, 2008 after the appropriate adjusting entries have been recorded and posted. Do not use decimals in your answer.
Explanation / Answer
ADJUSTING ENTERIES:-
1]INSURANCE EXPENSE FOR 2008 = 18000*(4/24)
= 3000
BALANCE IN PREPAID INSURANCE AS ON 31ST DEC , 2008 = 18000-3000
=15000
2]DEBIT ACCRUED RENT = 10000
CREDIT RENT REVENUE = 10000
3] DEBIT DEPRECIATION EXPENSE = 4000
CREDIT PROFIT & LOSS A/C = 4000
INCOME STATEMENT
SALES REVENUE = 99000
LESS:-COST OF GOODS SOLD =( 45000)
GROSS PROFIT = 54000
ADD:-OTHER INCOME
ADJUSTING ENTERIES:-
1]INSURANCE EXPENSE FOR 2008 = 18000*(4/24)
= 3000
BALANCE IN PREPAID INSURANCE AS ON 31ST DEC , 2008 = 18000-3000
=15000
2]DEBIT ACCRUED RENT = 10000
CREDIT RENT REVENUE = 10000
3] DEBIT DEPRECIATION EXPENSE = 4000
CREDIT PROFIT & LOSS A/C = 4000