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Toronado Ltd. reported the following items in its unadjusted trial balance as of 31 December 20X4 for the 20X4 fiscal year. This trial balance is
Toronado Ltd. reported the following items in its unadjusted trial balance as of 31 December 20X4 for the 20X4 fiscal year. This trial balance is listed in alphabetical order. Note that this is a partial trial balance and does not include all accounts. Accounts have normal (debit or credit) balances.
Administration expense | $ | 235,600 | |||||||
Accounts payable | 76,700 | ||||||||
Accounts receivable | 99,700 | ||||||||
Allowance for doubtful accounts (credit) | 1,900 | ||||||||
Cash dividends declared | 30,900 | ||||||||
Freight-out (delivery to customers) | 26,800 | ||||||||
Gain on sale of automobile | 1,300 | ||||||||
Insurance expense | 38,160 | ||||||||
Interest expense | 27,000 | ||||||||
Loans receivable, 8% | 74,900 | ||||||||
Merchandise inventory, 1 January | 89,300 | ||||||||
Notes payable, 6% | 499,800 | ||||||||
Purchases | 560,300 | ||||||||
Salaries and employee benefits | 121,400 | ||||||||
Sales returns and allowances | 42,600 | ||||||||
Sales revenues | 1,898,700 | ||||||||
Selling expense | 34,600 | ||||||||
Supplies expense | 46,400 | ||||||||
Supplies inventory | 500 | ||||||||
Retained earnings, 1 January | 568,200 | ||||||||
Unearned revenue | 31,900 | ||||||||
Utilities expense | 65,300 | ||||||||
Other information:
- The tax rate is 30%, but no tax has yet been recorded.
- Closing merchandise inventory is $76,400. Closing supplies inventory is $1,200.
- The insurance expense represents a payment made on 1 May for a 24-month fire insurance policy.
- Customers owe $52,900 for goods delivered on 31 December; this amount has not yet been recorded.
- All sales are on account, except those that are prepaid.
- Unearned revenue represents all customer deposits received during the year. Of this
- amount, 60% is still unearned at the end of the year.
- Bad debt expense is to be recognized as 1% of total sales.
- Interest on the note payable was last paid and recorded on 31 October.
- The company owes $3,100 in utilities.
- Interest on the loan receivable has not been paid or recorded all year.
Required: 1. Prepare journal entries to reflect the required adjustments.
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