Question
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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