Forbes Ltd’s annual accounting year ends on 30 June. It is 30 June 2022 and all of the 2022 entries except the following adjusting entries have been made.

a On 1 April 2022 the company borrowed $80 000 from a local bank at 5 per cent per annum interest. The principal and interest are payable on 30 June 2023. The borrowing was correctly recorded but no adjustment has been made for interest.

b On 1 March 2022 Forbes collected six months’ rent of $18 000. At that date Forbes debited Cash and credited Unearned rent revenue for $18 000.

c On 1 October 2021 Forbes paid a one-year premium for fire insurance, $18 000, for coverage starting on that date. Cash was credited and prepaid insurance was debited for this amount.
d At 30 June 2022 wages earned by employees totalled $43 000. The employees will be paid in July 2022.
e On 30 June 2022 the company estimated it owed $7000 for 2022 electricity costs. The amount will be paid when the invoice is received in July 2022.
f Office supplies on hand at 30 June 2021 totalled $1000. Additional office supplies costing $2400 were purchased and debited to Office supplies (asset account). The count of supplies on hand at year-end was $800.
Required:
Using the following headings, indicate the effect of each adjusting entry and the amount of the effect.
Use + for increase, − for decrease and NE for no effect.

Transcribed Image Text:

a b C d e f Assets Liabilities Revenues Expenses