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Question #2 - 41 marks (33 minutes)

You are the Controller of ODriscoll Ltd. and need to prepare any adjusting/correcting journal entries as at/for the year ending December 31, 2020. The unadjusted trial balance is below:

ODRISCOLL LTD.
Unadjusted Trial Balance
31-Dec-20
Account	Debit	Credit
Cash	$47,600
Accounts receivable	67,800
Allowance for doubtful accounts		$3,000
Inventory	38,000
Bank loans		40,000
Accounts payable		15,900
Unearned sales revenue		8,200
Common shares		13,800
Retained earnings		45,232
Dividends	34,000
Sales revenue		481,536
Cost of goods sold	192,448
Rent expense	108,000
Salaries and wages expense	109,020
Property tax expenses	6,200
Interest expense	2,400
Utilities expense	2,200
Total	$607,668	$607,668

Based on the information above and additional information provided below, prepare all necessary adjusting and correcting entries at December 31, 2020 for ODriscoll Ltd.

• State any assumptions needed (if no adjustment is needed, state why.)
• Show all calculations.
• The bank loan charges interest at 9% annually. Interest has been paid up until August 31, 2020.

• Dec 31, 2020	Debit	Credit

• ODriscoll sold product to a customer for a price of $2000 on December 31, with terms fob destination. The product arrived at the customers location on January 2, 2021. The credit sale, as well as the cost of goods sold of $1300, was booked in 2020.

• Dec 31, 2020	Debit	Credit

• Management has been going over the list of accounts receivable for possible accounts that are not collectible. One account for $300 still needs to be written off.

• Dec 31, 2020	Debit	Credit

• An analysis of the ending adjusted accounts receivable (ie. factoring in all adjustments above) by ODriscolls management reveals that 5% of this balance is expected to be uncollectible. The allowance account should reflect this fact.

• Dec 31, 2020	Debit	Credit