Hardy3
Sep 22, 2010, 10:35 PM
The unadjusted trial balance of Imagine Ltd. At December 31, 2010, is as follows:
Debit Credit
Cash $ 10,850
Accounts Receivable 56,500
Allowance for Doubtful Accounts $ 750
Inventory 58,000
Prepaid Insurance 2,940
Prepaid Rent 13,200
Investment in Legume Inc. Bonds 18,000
Land 10,000
Plant and Equipment 104,000
Accumulated Depreciation 18,000
Accounts Payable 9,310
Bonds Payable 50,000
Common Shares 100,000
Retained Earnings 80,660
Sales 223,310
Rent Revenue 10,200
Purchases 170,000
Purchase Discounts 2,400
Transportation-out 9,000
Transportation-in 3,500
Salaries and Wages Expense 31,000
Interest Expense 6,750
Miscellaneous Expense 890
$ 494,630 $ 494,630
1. Imagine estimates that 7% of the Accounts Receivable balances on December 31, 2010, will be uncollectible. On December 28, 2010, the bookkeeper incorrectly credited Sales for a receipt of $1,000 on account. This error had not yet been corrected on December 31.
2. The regular rate of depreciation is 10% of cost per year. Acquisitions and retirements during a year are depreciated at half this rate. There were no retirements during the year. On December 31, 2009, the balance of Plant and Equipment was $90,000.
3. On April 1, 2010, Imagine issued at par value 50 $1,000, 11% bonds maturing on April 1, 2013. Interest is paid on April 1 and October 1.
Prepare the year-end adjusting and correcting entries in general journal form using the information given.
Debit Credit
Cash $ 10,850
Accounts Receivable 56,500
Allowance for Doubtful Accounts $ 750
Inventory 58,000
Prepaid Insurance 2,940
Prepaid Rent 13,200
Investment in Legume Inc. Bonds 18,000
Land 10,000
Plant and Equipment 104,000
Accumulated Depreciation 18,000
Accounts Payable 9,310
Bonds Payable 50,000
Common Shares 100,000
Retained Earnings 80,660
Sales 223,310
Rent Revenue 10,200
Purchases 170,000
Purchase Discounts 2,400
Transportation-out 9,000
Transportation-in 3,500
Salaries and Wages Expense 31,000
Interest Expense 6,750
Miscellaneous Expense 890
$ 494,630 $ 494,630
1. Imagine estimates that 7% of the Accounts Receivable balances on December 31, 2010, will be uncollectible. On December 28, 2010, the bookkeeper incorrectly credited Sales for a receipt of $1,000 on account. This error had not yet been corrected on December 31.
2. The regular rate of depreciation is 10% of cost per year. Acquisitions and retirements during a year are depreciated at half this rate. There were no retirements during the year. On December 31, 2009, the balance of Plant and Equipment was $90,000.
3. On April 1, 2010, Imagine issued at par value 50 $1,000, 11% bonds maturing on April 1, 2013. Interest is paid on April 1 and October 1.
Prepare the year-end adjusting and correcting entries in general journal form using the information given.