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Based on the information above and additional information provided below, prepare all necessary adjusting entries (entries to fix the accounts) at June 30, 2019 for
Based on the information above and additional information provided below, prepare all necessary adjusting entries (entries to fix the accounts) at June 30, 2019 for Power Ltd for the second quarter.
- State any assumptions needed (if no adjustment is needed, state why.)
- Show all calculations.
Additional information relating to the SECOND QUARTER OF 2019:
- On-line advertising of $800 to be shown during the third quarter of 2019 was paid for and recorded in June.
- No entry has been made for June utilities since the utilities bill will not arrive until July for an estimated $250.
- Management has been going over the list of accounts receivable for possible accounts that are not collectible. One account for $600 still needs to be written off.
- You find an error in June of a recording of an invoice (still unpaid) from a supplier for inventory. The invoice was recorded for $990 instead of $9900.
- A shipment of product sold to a customer on credit, was scheduled to be delivered on June 29, 2019. However, due to a labour strike with the shipping company, Power had to postpone the shipment until July 3, 2019 and ship with another company. The accountant recorded the $20,000 sale in the second quarter of 2019 along with the cost of the inventory of $13,000.
- After some analysis, management informs you that the Unearned Sales Revenue account should have a balance of $1,900.
- You are told that a sublet lease arrangement for some of Powers excess office space had been negotiated for the summer. On investigation, you find a three month lease was signed commencing June 1, 2019 for $300 per month (June 1 Aug 31), all paid in advance. Power has not had any rent revenue except for this arrangement.
- An analysis of the ending adjusted accounts receivable (ie. factoring in all adjustments above) by management reveals that 8% of this balance is expected to be uncollectible. The allowance account should reflect this fact.
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