Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Unadjusted Trial Balance 31 December 2019 Account Title Debit $ Credit $ Cash 181,500 Accounts receivable 420,700 Prepaid insurance 13,500 Hotel supplies 7,500 Hotel equipment

image text in transcribedimage text in transcribed
Unadjusted Trial Balance 31 December 2019 Account Title Debit $ Credit $ Cash 181,500 Accounts receivable 420,700 Prepaid insurance 13,500 Hotel supplies 7,500 Hotel equipment 378,000 Accumulated depreciation: Hotel equipment 157,500 Land 500,000 Accounts payable 78,000 4% Notes payable 120,000 Unearned revenue 250,000 Interest payable 2,000 Income taxes payable 61,500 Dividends payable 20,000 Share capital ($2 per share) 450,000 Retained earnings 204,500 Dividends 20,000 Revenue earned 1,336,300 Salaries expense 629,000 Insurance expense 63,000 Rent expense 350,000 Depreciation expense : Hotel equipment 49,500 Hotel supplies expense 3,600 Interest expense 2,000 Income taxes expense 61,500 $2,679,800 $2,679,800Information on adjusting entries: (1) A guest has occupied a deluxe double room with sea view from 25 to 31 December 2019 and no entries have been made. The total room charges of $56,000 are settled on 1 January 2020. (2) Hotel equipment is depreciated by straight-line method over an estimated useful life of 7 years. (3) The Company borrowed $120,000 by signing a 9-month notes payable with annual interest rate of 4% on 1 May 2019. The principal and the total accrued interest will be due on 31 January 2020. The last adjusting entries was made on 30 September 2019. (4) The Company purchased medical insurance policy for the employees on 1 February 2019. The insurance premium is paid in advance for three months on 1 February, 1 May, 1 August and 1 November. (5) On 31 December 2019, the Company signed a contract of $100,000 with a YouTuber to promote the hotel offer in the YouTube channel in January 2020. The payment will be due on 31 January 2020. (6) The accountant estimates that the total income tax expense for the entire year should be $93,600. The amount will be due in mid of April 2020. (7) The unrecorded salaries for employees for December 2019 amounting to $ 55,500 will be paid on 7 January 2020. (8) Unearned revenue showed in the account was related to the cash received in advance from a customer for holding a wedding party in the function room of Relax Hotel. The party was held on 25 December 2019. (9) The Company declared a final dividend of $0.2 per share on 24 December 2019, and then paid all the dividends declared on 31 December 2019. No entries for these transactions have been recorded. Required: (a) Prepare the necessary adjusting journal entries on 31 December 2019 to bring the financial records of Relax Hotel Company up-to-date. Use the account titles given in the Trial Balance where appropriate. Show your workings. Explanations are NOT required. If no adjusting entries are required, state "No entry" and name the accounting principle applied

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Carl Warren

13th Edition

1133607616, 978-1133607618

More Books

Students also viewed these Accounting questions