QUESTION 1 Balance Day Adjustments (18 marks) Below is the unadjusted Trial Balance for Better Gourmet, an Italian restaurant that specializes in pizza and pasta dishes The business is owned by Silvia Drury, and below is the Unadjusted Trial balance for the business as at 30 June 2020 Silvia Drury trading as Better Gourmet Unadjusted Trial Balance As at 30 June 2020 Cash at Bank 32,000 Accounts Receivable 40,000 Inventory 18,000 Prepaid Rent 7,000 Supplies on Hand 4,500 Kitchen Equipment 85,000 Accumulated Depreciation Kitchen Equipment 40,000 Computer Equipment 36,000 Accumulated Depreciation Computer Equipment 12,000 Accounts Payable 25,000 Unearned Revenue 4,000 Loan Payable 50,000 S Drury Capital (1 July 2019) 60,900 S Drury Drawings 4,000 Sales Revenue 500,000 Cost of Good Sold 310,000 Discount received 5,500 Freight inwards 4,200 Salary Expense 90,000 Delivery Expense 5,000 Advertising Expense 7,100 Rent expenses 24,000 Insurance Expense 8,000 Electricity Expense 9,100 Discount Allowed 1,500 Telephone expense 12,000 Totals 697,400 697,400 (Continued on the next page) On 1 January 2020 the business paid rent for the next 7 months On this date (1 January 2020) Prepaid Rent was debited with $7 000 and Cash at Bank was credited Both the Kitchen Equipment and Computer Equipment are expected to be used evenly over their useful lives The expected total useful lives and residual values of both assets is as follows Estimated Useful life Estimated Residual Kitchen Equipment 4 years $4 000 Computer Equipment 3 years $1 000 On 1 March 2020 a client who wants to host a birthday party at Better Gourmet paid an amount of $4 000 to Better Gourmet On March 1, 2020 Cash at Bank was debited with $4 000 and Unearned Revenue was credited The party took place on 1 May 2020 but an entry has not yet been made yet to record that the birthday party has taken place A count of the supplies on hand room revealed that supplies on hand at 30 June 2020 were $2 000 (Hint The difference between the supplies on hand and supplies in the unadjusted trial balance should be treated as an expense ) On the evening of June, 30 2020 a big business hosted their financial year end function at Better Gourmet Silvia Drury only invoiced the business for this dinner on July 2,2020 The total amount that she invoiced to the big business was $9,800 At June 30, 2020 Better Gourmet owed staff $5 500 for shifts that they have already completed but which Better Gourmet has not recorded or paid yet As of 30 June 2020, Silvia has estimated that 4 of the Accounts Receivable may not not be recoverable (customers may not be able to pay) REQUIRED It is now the end of the financial year (30 June 2020) and Silvia has asked you to prepare any necessary balance day adjusting journals Use the General Journal document provided to record the correctly formatted journal entries required IMPORTANT Journals must be correctly formatted and must include a date and a narration (explanation) for each entry Marks will be deducted if this instruction is not followed (18 marks)

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QUESTION 1: Balance Day Adjustments (18 marks) Below is the unadjusted Trial Balance for Better Gourmet, an Italian restaurant that specializes in pizza and pasta

QUESTION 1: Balance Day Adjustments (18 marks)

Below is the unadjusted Trial Balance for Better Gourmet, an Italian restaurant that specializes in pizza and pasta dishes. The business is owned by Silvia Drury, and below is the Unadjusted Trial balance for the business as at 30 June 2020.

Silvia Drury trading as Better Gourmet

Unadjusted Trial Balance

As at 30 June 2020

Cash at Bank	32,000
Accounts Receivable	40,000
Inventory	18,000
Prepaid Rent	7,000
Supplies on Hand	4,500
Kitchen Equipment	85,000
Accumulated Depreciation - Kitchen Equipment		40,000
Computer Equipment	36,000
Accumulated Depreciation Computer Equipment		12,000
Accounts Payable		25,000
Unearned Revenue		4,000
Loan Payable		50,000
S Drury - Capital (1 July 2019)		60,900
S Drury - Drawings	4,000
Sales Revenue		500,000
Cost of Good Sold	310,000
Discount received		5,500
Freight inwards	4,200
Salary Expense	90,000
Delivery Expense	5,000
Advertising Expense	7,100
Rent expenses	24,000
Insurance Expense	8,000
Electricity Expense	9,100
Discount Allowed	1,500
Telephone expense	12,000
Totals	697,400	697,400

(Continued on the next page)

On 1 January 2020 the business paid rent for the next 7 months. On this date (1 January 2020) Prepaid Rent was debited with $7 000 and Cash at Bank was credited.

Both the Kitchen Equipment and Computer Equipment are expected to be used evenly over their useful lives. The expected total useful lives and residual values of both assets is as follows:

	Estimated Useful life	Estimated Residual
Kitchen Equipment	4 years	$4 000
Computer Equipment	3 years	$1 000

On 1 March 2020 a client who wants to host a birthday party at Better Gourmet paid an amount of $4 000 to Better Gourmet. On March 1, 2020 Cash at Bank was debited with $4 000 and Unearned Revenue was credited. The party took place on 1 May 2020 but an entry has not yet been made yet to record that the birthday party has taken place.

A count of the supplies on hand room revealed that supplies on hand at 30 June 2020 were $2 000. (Hint: The difference between the supplies on hand and supplies in the unadjusted trial balance should be treated as an expense.)

On the evening of June, 30 2020 a big business hosted their financial year end function at Better Gourmet. Silvia Drury only invoiced the business for this dinner on July 2,2020. The total amount that she invoiced to the big business was $9,800.

At June 30, 2020 Better Gourmet owed staff $5 500 for shifts that they have already completed but which Better Gourmet has not recorded or paid yet.

As of 30 June 2020, Silvia has estimated that 4% of the Accounts Receivable may not not be recoverable (customers may not be able to pay).

REQUIRED:

It is now the end of the financial year (30 June 2020) and Silvia has asked you to prepare any necessary balance day adjusting journals.

Use the General Journal document provided to record the correctly formatted journal entries required.

IMPORTANT* Journals must be correctly formatted and must include a date and a narration (explanation) for each entry. Marks will be deducted if this instruction is not followed.

(18 marks)