Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 2 (Mandatory) (20 points) The requirement is to make adjusting entries. Assume that the D-Toys Ltd. has a December 31 fiscal year- end and

image text in transcribed
Question 2 (Mandatory) (20 points) The requirement is to make adjusting entries. Assume that the D-Toys Ltd. has a December 31 fiscal year- end and the accounting period is one year (-financial statements are prepared only at year-end adjusting entries are prepared only at year-end). First, provide the corresponding adjusting entries for D-Toys Ltd at the fiscal year end, Dec 31, 2018 in the box following "Adjusting entry:" Debits first and then credits. Since only one row is allowed in the box, put debits and credits in the same row. But identify debits and credits using the symbol "Dr" and "Cr" For example, "Dr) Supplies expense $90 Cr) Supplies $90" No adjusting entries have been made before Des 31 because the accounting period is one year rather than one month or one quarter Second, in the absence of the adjusting entry, evaluate what would happen to the assets liabilities and equity of the D-Toys Ltd at the fiscal year-end date using the following words: "Overstatement" or "Understatement" following Assets, Liabilities, or Equity. When neither Overstatement nor Understatement occurs, there is no need to indicate the specific item in the box. For example, if liabilities are overstated and equity is understated, state "Liabilities: Overstatement: Equity: Understatement" in the box following "Effects without adjusting entry. No need to mention "Assets" in the box D-TOYS Ich On Apr 1, 2018. purchased equipment for $300.000 with $100.000 paid by cash and $200,000 borrowed from banks. The purchase was correctly recorded on Apr 1. The life of the equipment is estimated to be 10 Fears. The bank loans bear 6% interest (6c is the annual interest rate and are due one year later. April 1 2019. Both the interest and principal are paid on the due date On Dec 31. 2018, make the adjusting entry for the bank loans' interest. Hint: 9 months of interest have incurred

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting For Managers Interpreting Accounting Information For Decision Making

Authors: Paul M. Collier

1st Edition

0470845023, 9780470845028

More Books

Students also viewed these Accounting questions

Question

clarify and articulate your research methodology;

Answered: 1 week ago

Question

consider how to build on prior learning.

Answered: 1 week ago