Question
Need Answer for (c) only The trial balance of Chi Corporation is reproduced below. The following information below is relevant to the preparation of adjusting
Need Answer for (c) only
The trial balance of Chi Corporation is reproduced below. The following information below is relevant to the preparation of adjusting entries needed to both properly match revenues and expenses for the period and reflect the proper balances in the real and nominal accounts.
(a) Chi determined that one percent of sales will become uncollectible (see the trial balance for total sales revenue of the year).
(b) Depreciation is computed using the straight-line method, with a ten-year life and $5,000 salvage value.
(c) Salesmen are paid commissions of 15% of sales. Commissions on sales for December have not been paid.
(d) The note was issued on October 1, bearing interest at 8%, due Feb. 1, 2021.
(e) A physical inventory of supplies indicated $440 of supplies currently in stock.
(f) On December 1, 2020 Chi paid $3,000 for a 6-month fire insurance policy. Coverage began on December 1 through May 31, 2021.
(g) The salaries of employees from December 28 to December 31 is $5,000. This salary will be paid on January 8, 2021. The firm usually uses Salary Payable account to accrue salary.
Chi Corporation
Work Sheet
For the Year Ended December 31, 2020
Trial Balance
Accounts Dr. Cr.
Cash 12,400
Equity Invest. 14,050
Accounts Rec. 30,000
Allowance for Doutful Accounts 420
Inventory 13,800
Supplies 1,040
Prepaid insurance 3,000
Equipment 65,000
Accum. Depreciation-Equip. 9,500
Accounts Payable 4,400
Notes Payable 10,000
Common Stock 40,000
Ret. Earnings 29,690
Sales Revenue 360,000
Cost of Goods Sold 245,520
Salaries and Wages Expense 20,800
Sales Commission Expense 39,000
Rent Expense 7,200
Misc. Expense 2,200
Totals 454,010 454,010
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