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Question1:To complete accounting cycle, consider the following list of selected transactions. The transactions were completed by Bati Service Center in the year of 2016. January
Question1:To complete accounting cycle, consider the following list of selected transactions. The transactions were completed by Bati Service Center in the year of 2016.
- January 2,AtoYimer took Birr 1000,000 from his personal savings and deposited it in the name of Bati service center.
- February 1,Bati service center borrowed 50,000birr 3 years commercial loan at 12% annually, interests payable annually.
- February 28, Purchased office equipment priced at 6,000birr, giving a 10% promissory note, maturity date July 1, 2016, in exchange.
- March 2, Received 4,000birr cash for services rendered.
- April 11, Purchased office supplies 1,000birr on account.
- May 10, Paid 1,000birr in cash for the office supplies purchased on April 11.
- June 15, Purchased truck for 550,000birr in cash for to be used for business travel.
- July 1, Paid off a short-term liability of 6,200birr.
- July 1, Rent office space at annual rental fee of 12,000birr, the full amount of annual rental fee was paid in advance.
- August 15, performed service and send invoice of 30,000birr to client for service rendered.
- September 15, Collected cash of 30,000birr from client (see August 15).
- November 15, Signed a 100,000birr service agreement with one client, the service period will be started on February 1, 2017.
- November 30, Received 30,000birr cash as down payment for service agreement signed on November 15.
- December 31, determined that employee' salary expense for the year 2016 is 20,000birr and will be paid on Jan. 10, 2017.
- Placed order for 2,000birr additional office supplies to be delivered on January 10, 2017. (Assuming the purchase order is based on F.O.B. Destination).
The data needed to determine year-end adjustments are as follows:
- Adjustment for accrued interest for 3years 12% commercial loan borrowed on February 1, 2016 at December 31, 2016
- Estimated depreciation of equipment for the year, 1000 birr.
- The book value for the office supplies on hand at December 31, 2016 is 250 birr.
- Estimated depreciation of truck for the year, 10,000 birr.
- Accrued rent expense is 6000 birr
Instruction:
- Record the journal entries
- Prepare ledger (post to ledger account)
- Prepare trial balance
Prepare adjusting entries and adjusted trial balance
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