Another six months have passed and the fiscal year has concluded for Precision Computer Centre. Tony Freedman wants to make the necessary adjustments to his company’s accounts in order to prepare accurate financial statements at July 31, 2014.
Assignment
(The worksheet you require is at the end of the Study Guide with Working Papers.)
To prepare the necessary adjustments, use the trial balance shown on the next page and the information below.
Complete the 10-column worksheet for the 12 months ended July 31, 2014.
Inventory
Tony took inventory at the end of July and determined that there was $17,400 worth of merchandise left in stock on July 31.
Amortization of Computer Equipment
Computer depreciates at $33 a month—purchased May 6, 2013.
Computer workstations depreciate at $20 per month—purchased July 17, 2013.
Shop benches depreciate at $25 per month—purchased November 5, 2013.
Amortization of Office Equipment
Office equipment depreciates at $10 per month—purchased May 16, 2013.
Fax machine depreciates at $10 per month—purchased November 19, 2013.
Remember: If any long-term asset is purchased in the first 15 days of the month, Freedman will record amortization for the full month. If an asset is purchased later than the 15th, he will not record amortization in the month when it was purchased.
Additional Information
Rent for 6 months, at $400 per month, has expired.
Supplies on hand at year-end amounted to $530.
A portion of the insurance paid for in February has expired. Remember that the entire premium was debited to Prepaid Insurance.
The balance in Unearned Service Revenue (account 2050) was received from a new customer on June 1, 2014. It represents a prepayment to cover all necessary service on 10 computers for the 12 months ending May 31, 2015.