Question 4:

Adjusting Entries and Justifications

Miranda's Motor Mechanics analyzed the accounting records and other data for the business. The following information is made available for the year ended 30 June 2020.

Requirement: Prepare the end-of-period adjusting entries required on 30 June 2020. Ignore GST. Also mention what effects will be on assets or liabilities and Equity if adjusting entries were not recorded.

1.Salaries and wages owing to employees at the end of the financial year amounted to $2,480.

2.Included in the Prepaid Rent account is an amount of $1,600 paid in June for the month of July 2020. The Prepaid Rent account has a debit balance of $4,800.

3.A business hold a 90 day note receivable of $10,000 from a customer. The note bears an interest rate of 12% p. a. and was issued onMay 1 2020.

4.The balance of Unearned Revenue Account $8 400 on 30^th June 2020. Included in unearned revenue$1,650 for which services was performed on during the last of June.

5.Depreciation expense on equipment $4,200.