Smart Rentals Ltd opened for business on 1 April 2017. Here is its trial balance before adjustment on 30 June 2017 presented on a worksheet.

In addition to those accounts listed on the trial balance, the chart of accounts for Showroom Rentals Ltd also contains the following accounts: 123 Accumulated Depreciation—Building, 131 Accumulated Depreciation—Furniture, 506 Depreciation Expense, 512 Insurance Expense, 515 Interest Expense, and 530 Supplies Expense.

Other data:

1. Insurance expires at the rate of $900 per month and is an annual premium commencing 1 April 2017.

2. An inventory of supplies shows $7200 of unused supplies on 30 June.

3. Annual depreciation is $5400 on the building and $4500 on furniture.

4. The mortgage interest rate is 6%. (The mortgage was taken out on 1 April.)

5. $9000 of the Rent Revenue Received in Advance pertains to June. The remainder pertains to July.

6. Salaries of $1800 are unpaid at 30 June.

Required

(a) Using information provided complete the above worksheet. (A blank worksheet is available within the course management system that accompanies the text.)

(b) Journalise the adjusting entries on 30 June.

(c) Prepare a ledger using T accounts. Enter the trial balance amounts as opening balances and post the adjusting entries.

(d) Prepare an adjusted trial balance on 30 June.

(e) Prepare the statement of profit or loss and a calculation of retained earnings for the quarter ended 30 June 2017, and prepare the statement of financial position as at 30 June 2017.

(f) Identify which accounts should be closed on 30 June. 

Transcribed Image Text:

No. 100 112 113 120 122 130 200 212 220 300 400 505 510 525 Account name Cash Prepaid Insurance Supplies Land Building Furniture Accounts Payable Rent Revenue Received in Advance Mortgage Payable Share Capital Rent Revenue Advertising Expense Electricity Expense Salaries Expense Totals SMART RENTALS LTD Worksheet as at 30 June 2017 Trial balance Dr Cr $ 15000 10 800 11 400 90 000 420 000 100 800 28 200 21 600 210 000 360 000 55 200 3000 6000 18 000 $675 000 $675 000 Adjusted trial Statement of balance profit or loss Adjustments Dr Cr Dr Cr Dr Cr Statement of financial position Dr Cr