Workings: Important note; the year end for James Sargeant Compnay is the 31st March, 2009 Note 1 One month's prepayment for rent was made for April 2009. The value of the prepayment is $5,550/6mths = $925. Note 2 Electricity has been accrued up to March 2009, but has only been paid up to 31st December, 2008. Therefore the entire amount of $1,785 must be recorded as an accrual. Note 3 Calculation of the depreciation expense for the year ended 31st December, 2009 - 18% ($138,900-$45,500) = $16,812. Note 4 Inventory should be valued at the lower of cost and net realizable value. The cost of the inventory is $2,645 and its net realizable value is $4,000-$2,250 = $1,750. Therefore the value of the stock needs to be reduced by $895, that is $2,645-$1,750. Note 5 The updated provision for doubtful debt balance is 8% of $20,000 = $1,600. Therefore the current provision of $1,000 needs to be increased by $600. Now that all the notes have been accounted for the journal entries for the necessary adjustments can be made. I hope that you found this proposed solution helpful! If you did please share it! Also, feel free to ask any questions or to comment below. Best of luck!
4 Comments
Britney
5/21/2018 05:47:33 pm
Very thankful for this.
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Alisha
2/17/2019 04:03:01 pm
I would really love to get some help wuth CAPE Accounting Unit 1
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Accounting Lyceum
4/6/2019 07:41:14 am
Hi Alisha,
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Ameaka
7/2/2020 06:52:36 pm
I could really use your help
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AuthorThe author holds a Bsc (Hons) Degree in Applied Accounting from Oxford Brookes University, England and enjoys a successful career as an Accounting Supervisor and a private tutor. Archives
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