Question
Eco Life is a consulting firm that provides consulting on sustainable living. The business has been registered for goods and services tax (GST). The GST
Eco Life is a consulting firm that provides consulting on sustainable living. The business has been registered for goods and services tax (GST). The GST rate is 10%. On 30 June 2022, it completed its first year of operations. Some of the ledger account balances of the business, before any year-end adjustments, are given below:
| Dr | Cr |
Prepaid Advertising | 3,600 |
|
Motor Vehicle | 58,000 |
|
Stationery | 1,900 |
|
Service Fees Revenue |
| 870,000 |
Computer Database Expenses | 7,200 |
|
Salary expenses | 104,400 |
|
Telephone Expenses | 6,300 |
|
Electricity Expenses | 5,600 |
|
Unearned Service Fees Revenue |
| 32,500 |
No adjusting entries have been made to these accounts during the year. An analysis of the business records reveals the following:
- The balance in prepaid advertising represents the amount paid for an advertisement in an association magazine for 1 year commencing 1 September 2021. The agreement with the publisher stipulates the same amount of advertising space each month..
- The motor vehicle was purchased on 1 January 2022. The vehicle needs to be depreciated at 15% per annum at cost.
- The balance in the unearned service fees revenue account includes $13,500 received on 1 April 2022 for consultation services conducted in June 2022.
- The telephone expense ledger balance does not include the amount for the last two weeks of June 2022. The telephone bill for June $580 (plus GST) will be paid in the second week of July 2022.
- Stationery on hand at 30 June 2022 totalled $400
- An invoice representing $9,200 (plus GST) of service performed for Orchard Ltd during June 2022 has not been recorded as of 30 June 2022. Orchard Ltd will settle the bill by the first week of July 2022.
QUESTION:
- Record the necessary adjusting entries for the year ended on 30 June 2022. (Narrations are not required).
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