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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

You are the Controller of O’Driscoll 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:

O’DRISCOLL 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

Utility 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 O’Driscoll 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

  • O’Driscoll sold the product to a customer for a price of $2000 on December 31, with terms fob destination. The product arrived at the customer’s 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 O’Driscoll’s management reveals that 5% of this balance is expected to be uncollectible. The allowance account should reflect this fact.
  • Dec 31, 2020

    Debit

    Credit

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