Prepare adjusting entries

The following additional information is available on 31 March 2021:

1. (a) Electricity incurred for the month amounted to $8,000.

2. (b) The employees receive a total salary of $45,000 for a five-day work week. All employees worked for the whole month of March.

3. (c) (i)Building, (ii) equipment and (iii) motor vehicles are recorded at historical cost and their estimated useful lives are 40 years, 5 years and 5 years respectively. No residual value is expected for the building. The building was acquired on 1 May 2017. The company uses straight-line method for all buildings. All the equipment and motor vehicles are acquired on 1 January

2018. The company uses unit of activity method to depreciate equipment and the double-declining balance method to depreciate all motor vehicles. The company expects that the salvage value of the equipment and motor vehicles is 10 % of the purchase cost. The equipment is for packing and the total amount of packing for 5 years are estimated to be 594,000 units. The total packing in March amounted to 9,700 units. Annual depreciation is calculated for each year from 1 January to 31 December, monthly depreciation is equal to (annual depreciation / 12).

4. (d) Physical count showed that $5,000 of supplies and $796,000 of merchandise inventory remained on hand at 31 March 2021.

5. (e) The bank statement balance is $50 greater than the cash account balance.

   This is relating to the interest earned for the cash balance in the bank account for March.

6. (f) The prepaid insurance was paid in last December covering a 12-month general insurance from December 2020 to November, 2021.

7. (g) Allowance for bad debt is estimated based on 10% of the closing accounts receivable balance due to dramatical down turn of the economy.

8. (h) Recognize interest expense for the month.

9. (i) Recognize interest revenue for the month.

Intelligent Toys, Inc (ITI) is a well establish toys trading company which adopts the periodic system. ITI prepares its financial statements on a monthly basis. The trial balance of ITI as at 28 February 2021 is presented as follows: Intelligent Toys, Inc Trial Balance As at 28 February 2021 Account No. Account Title Debit ($) Credit ($) 420,000 675,000 931,500 570,000 664,668 20,250 9,720,000 1,199,520 220,000 201 Accounts Payable 112 Accounts Receivable 152 Accumulated Depreciation - Building 154 Accumulated Depreciation - Equipment 156 Accumulated Depreciation - Motor Vehicle 113 Allowance for Doubtful Accounts 151 Building 101 Cash 291 Dividends Payable 153 Equipment 115 Interest Receivable 140 Long-term Investment 121 Merchandise Inventory 155 Motor Vehicle 114 Notes Receivable 131 Prepaid Insurance 320 Retained Earnings 241 Salaries Payable 311 Share Capital - Ordinary $1 par value, 10,000,000 shares authorized, 6,000,000 shares issued and 5,977,500 shares outstanding 312 Share Capital - Preference 5%, $100 par value, noncumulative, 100,000 shares authorized, 60,000 shares issued and outstanding 313 Share Premium - Ordinary 314 Share Premium - Preference 315 Share Premium - Treasury 132 Supplies 330 Treasury Shares (22,500 shares) 990,000 144,000 750,000 975,000 832,500 2,800,000 18,000 2,077,212 117,000 6,000,000 6,000,000 840,000 300,000 8,000 8,360 56,250 18,168,630 18,168,630 Intelligent Toys, Inc (ITI) is a well establish toys trading company which adopts the periodic system. ITI prepares its financial statements on a monthly basis. The trial balance of ITI as at 28 February 2021 is presented as follows: Intelligent Toys, Inc Trial Balance As at 28 February 2021 Account No. Account Title Debit ($) Credit ($) 420,000 675,000 931,500 570,000 664,668 20,250 9,720,000 1,199,520 220,000 201 Accounts Payable 112 Accounts Receivable 152 Accumulated Depreciation - Building 154 Accumulated Depreciation - Equipment 156 Accumulated Depreciation - Motor Vehicle 113 Allowance for Doubtful Accounts 151 Building 101 Cash 291 Dividends Payable 153 Equipment 115 Interest Receivable 140 Long-term Investment 121 Merchandise Inventory 155 Motor Vehicle 114 Notes Receivable 131 Prepaid Insurance 320 Retained Earnings 241 Salaries Payable 311 Share Capital - Ordinary $1 par value, 10,000,000 shares authorized, 6,000,000 shares issued and 5,977,500 shares outstanding 312 Share Capital - Preference 5%, $100 par value, noncumulative, 100,000 shares authorized, 60,000 shares issued and outstanding 313 Share Premium - Ordinary 314 Share Premium - Preference 315 Share Premium - Treasury 132 Supplies 330 Treasury Shares (22,500 shares) 990,000 144,000 750,000 975,000 832,500 2,800,000 18,000 2,077,212 117,000 6,000,000 6,000,000 840,000 300,000 8,000 8,360 56,250 18,168,630 18,168,630