Question
After analyzing the accounting records and other data for the business of Chriss Lawn Mowing Business, the following information is made available for the year
After analyzing the accounting records and other data for the business of Chriss Lawn Mowing Business, the following information is made available for the year ended 30 June 2021:
a) A one-year insurance policy was purchased for $2,400 on 1 December 2020. The payment was initially recorded as an expense.
b) Chriss Lawn Mowing Business has completed $2,000 of work for which it has neither received cash nor billed the customer.
c) On 1 March 2021, Chriss Lawn Mowing Business entered into an agreement with a customer for a 12-month period lawn mowing services commencing on the same day. The customer paid the entire fees amounting to $24,000 on 1 March 2021. The initial payment is recorded as Unearned Revenue (liability).
d) The supplies account (Asset) had a balance of $7,000 on 1 July 2020. A physical stocktake reveals that the company has $1,300 on hand at 30 June 2021.
e) Chriss Lawn Mowing Business purchased a new equipment on 1 February 2021 at a cost of $70,000. The residual value and useful life of the equipment are $10,000 and 5 years, respectively. The business uses a straight-line depreciation method.
f) On 30 June 2021, Chriss Lawn Mowing Business estimated that $30,000 of the accounts receivable balance would be uncollectible. Before the year-end adjustments, the Allowance for Doubtful Debts account had a debit balance of $3,500. Prepare the journal entry to bring the allowance to its estimated amount.
g) Chris Lawn mowing Business borrowed $24,000 from the Bank ABC on 1 October 2020 at the annual interest rate of 10%. The first interest payment will be made on 1 October 2021.
Required:
Prepare adjusting entries required on 30 June 2021. Narrations are NOT required.
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