Question
You have been given the unadjusted trial balance for the Bogie & Bacall Company (B&B) as of 12/31/2018. B&B prepares financial statements annually. On the
You have been given the unadjusted trial balance for the Bogie & Bacall Company (B&B) as of 12/31/2018. B&B prepares financial statements annually.
On the designated worksheet, prepare in journal entry form the adjusting journal entries for the following items. Letter the journal entries to correspond to the below information. (Round all numbers to the nearest dollar)
On June 1, 2018 B&B paid Lorre Advertising $48,000 for two years of advertising services. They debited Prepaid Advertising at the time. Equal services are provided in year 1 and year 2 of the contract.
$4,250 of store supplies were purchased during the year and the asset Store Supplies was increased. $2,150 of these supplies were used during the year.
Cost of Goods Sold for one Merchandise transaction was erroneously recorded as a debit to Cost of Sales and a credit to Accounts Payable of $7,070. It should have been recorded as $7,700, with a credit to the proper account.
On October 1, 2018, B&B made a loan to Greenstreet & Co., evidenced by a 9-month note receivable at an annual interest rate of 4%. Principal and interest will be paid at the end of the 9-months. The note was recorded in Notes Receivable and is the only note outstanding.
Sales salaries of $6,200 and office salaries of $4,800 were earned and remained unpaid at 12/31/18.
No depreciation expense was recorded for the year on the Office Equipment. The equipment was acquired on April 1 of the year just ended, it has a $5,000 salvage value, and is to be depreciated over a 5 year life under the double-declining balance method.
On November 1, 2018, B&B collected $24,000 for consulting services to be performed from November 1, 2018 to February 28, 2019. The company credited the Unearned Consulting Revenue account when the cash was received.
Based on past experience, B&B calculates bad debt expense at 1.5% of net sales (excluding Consulting Revenue) for the year.
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