ACCOUNTING JOURNAL ENTRY PROBLEM

| June 11, 2016

Question
You are now asked to journalize and post the adjusting entries after completing the worksheet. This is because, in the manual accounting system, the worksheet is not part of the journals and ledgers. Therefore completing the Adjustments column in the worksheet does not automatically update the appropriate ledger accounts. Since this practice set is a manual accounting practice set, you are still required to manually journalize the adjusting entries and post them to the general ledger as a separate step.

The purpose of adjusting entries is to ensure that the general ledger account balances reflect the revenues earned and expenses incurred during the accounting period.

Remember that the details of the end of month adjustments for June are as follows:

§ Office Furniture owned by the business: original purchase price was $7,000, estimated useful life was 4 years, and estimated residual value was $1,000 at the end of the useful life. Depreciation is calculated on a monthly basis using the straight line method. The monthly depreciation charge is calculated as the yearly depreciation expense divided by the number of months in a year.

§ Office Equipment owned by the business: original purchase price was $46,000, estimated useful life was 11 years, and estimated residual value was $3,500 at the end of the useful life. Depreciation is calculated on a monthly basis using the straight line method. The monthly depreciation charge is calculated as the yearly depreciation expense divided by the number of months in a year.

§ The water usage for the month of June is estimated to be $116.

§ The estimated electricity payable as at the end of June is $268.

§ Sales staff work every single day during the week including weekends and are paid on a weekly basis. Wages were last paid up to and including 24 June. Wages incurred after that day (from June 25 to June 30 inclusive) are estimated to have been $310 per day.

§ Interest expense incurred during the month of June but not yet paid to MRMC Bank for the bank loan is $220.

§ Office supplies totaling $2,251 are still on hand at June 30.

§ One month of prepaid rent expired during June. Remember that at the beginning of June, the business paid two month’s worth of rent in advance.

§ 3 months of advertising remained pre-paid at the start of June.

§ 5 months of insurance remained pre-paid at the start of June.

When calculating the portion of prepayments that expire during the month of June, you are asked to assume that an equal amount of expense is incurred per month.

After taking a physical count of inventory at the end of the month, the balance of inventory on hand as at June 30 is found to be equal to the closing balance of the Merchandise Inventory account. This means there is no adjusting entry required for inventory shrinkage.

Instructions for adjusting entries

1)Use the.perdisco.com/resources/html/scenario/accPS3popup17.html”>worksheet to assist you in recording the adjusting entries in the general journal.

2)Post the adjusting entries from the general journal to the general ledger accounts.

3)Record the final adjusted balance of each ledger account in the Adjusted Balance row of each ledger, even for ledgers with a balance of zero. Although each ledger already has a running balance, the Adjusted Balance row must still be filled out in order to receive full points.

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Please note that any answers from previous pages carried through onto this page (either on the page or in a popup information page) have been reset, if necessary, to the correct answers. Your particular answers from previous pages are no longer shown.

Remember:

§ Enter all answers to the nearest whole dollar.

§ You are also required to apply the.perdisco.com/resources/html/scenario/accPS3popup20.html”>journals and ledgers instructions provided in previous weeks.

Before pressing the Submit answers button, we recommend that you click the Show All tab and check that all relevant accounting records have been completed.

Show AllSpecial JournalsGeneral JournalSubsidiary LedgersGeneral Ledger

(Q=861.generalJournalAdjEntries)

GENERAL JOURNAL

Date

Account and Explanation

Post
Ref.

Debit

Credit

Jun

30

(select)

(select)

Jun

30

(select)

(select)

Jun

30

(select)

(select)

Jun

30

(select)

(select)

Jun

30

(select)

(select)

Jun

30

(select)

(select)

Jun

30

(select)

(select)

Jun

30

(select)

(select)

Jun

30

(select)

(select)

Jun

30

(select)

(select)

(Q=870-130.StoreSupplies_adjEntry)

GENERAL LEDGER

Account: Office Supplies
Account No. 130

Date

Description

Ref.

Debit

Credit

Balance

May

31

Balance

2,515 DR

Jun

1

Cash purchase

CPJ

334

2,849 DR

Jun

30

Jun

30

Jun

30

Jun

30

Adjusted Balance

(Q=870-140.PrepaidRent_adjEntry)

Account: Prepaid Rent
Account No. 140

Date

Description

Ref.

Debit

Credit

Balance

May

31

Balance

0

Jun

1

Prepaid rent

CPJ

8,300

8,300 DR

Jun

30

Jun

30

Jun

30

Jun

30

Adjusted Balance

(Q=870-141.PrepaidAdvertising_adjEntry)

Account: Prepaid Advertising
Account No. 141

Date

Description

Ref.

Debit

Credit

Balance

May

31

Balance

9,000 DR

Jun

30

Jun

30

Jun

30

Jun

30

Adjusted Balance

(Q=870-142.PrepaidInsurance_adjEntry)

Account: Prepaid Insurance
Account No. 142

Date

Description

Ref.

Debit

Credit

Balance

May

31

Balance

5,000 DR

Jun

30

Jun

30

Jun

30

Jun

30

Adjusted Balance

(Q=870-151.AccDepnCapitalAsset2_adjEntry)

Account: Accum Depn: Office Furniture
Account No. 151

Date

Description

Ref.

Debit

Credit

Balance

May

31

Balance

1,875 CR

Jun

30

Jun

30

Jun

30

Jun

30

Adjusted Balance

(Q=870-161.AccDepnCapitalAsset1_adjEntry)

Account: Accum Depn: Office Equipment
Account No. 161

Date

Description

Ref.

Debit

Credit

Balance

May

31

Balance

16,420 CR

Jun

30

Jun

30

Jun

30

Jun

30

Adjusted Balance

(Q=870-220.WagesPayable_adjEntry)

Account: Wages Payable
Account No. 220

Date

Description

Ref.

Debit

Credit

Balance

May

31

Balance

1,110 CR

Jun

4

Paid staff wages

CPJ

1,110

0

Jun

30

Jun

30

Jun

30

Jun

30

Adjusted Balance

(Q=870-221.ElectricityPayable_adjEntry)

Account: Electricity Payable
Account No. 221

Date

Description

Ref.

Debit

Credit

Balance

May

31

Balance

805 CR

Jun

3

Paid electricity bill

CPJ

743

62 CR

Jun

30

Jun

30

Jun

30

Jun

30

Adjusted Balance

(Q=870-222.WaterPayable_adjEntry)

Account: Water Payable
Account No. 222

Date

Description

Ref.

Debit

Credit

Balance

May

31

Balance

117 CR

Jun

30

Jun

30

Jun

30

Jun

30

Adjusted Balance

(Q=870-225.InterestPayable_adjEntry)

Account: Interest Payable
Account No. 225

Date

Description

Ref.

Debit

Credit

Balance

May

31

Balance

0

Jun

30

Jun

30

Jun

30

Jun

30

Adjusted Balance

(Q=870-403.InterestRevenue_adjEntry)

Account: Interest Revenue
Account No. 403

Date

Description

Ref.

Debit

Credit

Balance

May

31

Balance

0

Jun

30

Interest received from the bank

GJ

600

600 CR

Jun

30

Jun

30

Jun

30

Jun

30

Adjusted Balance

(Q=870-511.AdvertisingExpense_adjEntry)

Account: Advertising Expense
Account No. 511

Date

Description

Ref.

Debit

Credit

Balance

May

31

Balance

0

Jun

30

Jun

30

Jun

30

Jun

30

Adjusted Balance

(Q=870-516.WagesExpense_adjEntry)

Account: Wages Expense
Account No. 516

Date

Description

Ref.

Debit

Credit

Balance

May

31

Balance

0

Jun

30

Total from cash payments journal

CPJ

7,089

7,089 DR

Jun

30

Jun

30

Jun

30

Jun

30

Adjusted Balance

(Q=870-540.RentExpense_adjEntry)

Account: Rent Expense
Account No. 540

Date

Description

Ref.

Debit

Credit

Balance

May

31

Balance

0

Jun

30

Jun

30

Jun

30

Jun

30

Adjusted Balance

(Q=870-541.ElectricityExpense_adjEntry)

Account: Electricity Expense
Account No. 541

Date

Description

Ref.

Debit

Credit

Balance

May

31

Balance

0

Jun

30

Jun

30

Jun

30

Jun

30

Adjusted Balance

(Q=870-542.WaterExpense_adjEntry)

Account: Water Expense
Account No. 542

Date

Description

Ref.

Debit

Credit

Balance

May

31

Balance

0

Jun

30

Jun

30

Jun

30

Jun

30

Adjusted Balance

(Q=870-543.InsuranceExpense_adjEntry)

Account: Insurance Expense
Account No. 543

Date

Description

Ref.

Debit

Credit

Balance

May

31

Balance

0

Jun

30

Jun

30

Jun

30

Jun

30

Adjusted Balance

(Q=870-544.SuppliesExpense_adjEntry)

Account: Office Supplies Expense
Account No. 544

Date

Description

Ref.

Debit

Credit

Balance

May

31

Balance

0

Jun

30

Jun

30

Jun

30

Jun

30

Adjusted Balance

(Q=870-560.DepnExpenseCapitalAsset2_adjEntry)

Account: Depn Expense: Office Furniture
Account No. 560

Date

Description

Ref.

Debit

Credit

Balance

May

31

Balance

0

Jun

30

Jun

30

Jun

30

Jun

30

Adjusted Balance

(Q=870-561.DepnExpenseCapitalAsset1_adjEntry)

Account: Depn Expense: Office Equipment
Account No. 561

Date

Description

Ref.

Debit

Credit

Balance

May

31

Balance

0

Jun

30

Jun

30

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