Adjusting Journal Entries (Appendix B):
Proper journal entries are prepared for all items on the trial balance that require adjustment. Required entries are properly formatted with a date, the correct accounts and debit/credit amounts. The explanation includes the reason that an entry was or was not required and all supporting calculations. Explanations are free from abbreviations, slang, spelling, grammar and incorrect word usage errors.
Appendix B (available in Excel) Account Debit Credit Cash (5,000) Accounts receivable 145,000 Interest receivable 28,000 Land 813,000 Buildings (net of 100,000 depreciation) 900,000 Equipment (net of 150,000 depreciation) 150,000 Notes receivable 20,000 Prepaid expenses 12,000 Supplies 300 Inventories 151,000 Accounts payable 36,300 Deferred revenue 68,000 Mortgage payable 489,000 Note 1 Loan payable 613,000 Note 2 Interest payable 90,640 Income tax payable 76,340 Common shares 213,000 Retained earnings 424,000 Dividends declared 25,000 Sales revenue 1,658,000 Cost of goods sold 622,000 Note 3 Selling expense 100,000 Salaries & wages expense 227,000 Utilities expense 36,000 Property tax expense 35,000 Insurance expense 23,000 Depreciation expense 50,000 Supplies expense 16,000 Interest expense 90,640 General & administrative expense 153,000 Income tax expense 76,340 $ 3,668,280 $ 3,668,280 1 $50,000 of the mortgage is due in 2021. 2 $200,000 of the loan is due in 2021. 3 Cost of goods sold was calculated based on the year-end physical inventory count as follows: Beginning inventory $212,000 + Purchases $561,000 – Ending inventory $151,000 = $622,000
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