Question
The accountant of ABC Limited has prepared the following unadjusted trial balance of ABC Limited on 30 th June 2021. Yellow Limited TRIAL BALANCE AS
The accountant of ABC Limited has prepared the following unadjusted trial balance of ABC Limited on 30th June 2021.
Yellow Limited
TRIAL BALANCE
AS AT 30th JUNE 2021
Accounts | Debit ($) | Credit ($) |
Cash at bank | 13 985 |
|
Account receivables | 26 200 |
|
Prepaid insurance | 3 900 |
|
Office Supplies | 4 680 |
|
Office equipment | 14 100 |
|
Accumulated depreciation - equipment |
| 2 850 |
Accounts payable |
| 315 |
Salary payable |
|
|
Unearned service revenue |
| 1 230 |
Loan payable |
| 10 500 |
Capital |
| 33 300 |
Drawings | 60 000 |
|
Service revenue |
| 159 270 |
Salary expenses | 66 000 |
|
Depreciation expenses - equipment |
|
|
Miscellaneous expenses | 18 600 |
|
TOTAL | 207 465 | 207 465 |
The following additional information is available at the end of June for adjustments:
- Mr Emmanuel is working as the inventory clerk. He performs the physical count of the office supplies on 30th June 2021. This physical count reveals that the unused office supplies of $550 are on hand.
- The rate of depreciation for the office equipment is 15% per annum and ABC Limited used the straight-line method of depreciation.
- Of the $1230 unearned service revenue, $300 is still unearned
- 60% of prepaid insurance is expired during this period.
- Salaries owed but not yet paid $1920.
- Provided consultancy service of $2000 on credit. This was not recorded for the month.
Required:
- Prepare adjusting entries at the end of 30 June, 2019. (6 marks)
- Calculate the balance of the total revenue of the company after adjustment. (2 marks)
- Explain why accrual accounting adjustments are required? (3 marks)
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