Colin Hayward is the owner of Pampered Puppies. The following information is available for the year ending March 31, 2006 and no adjusting entries have been prepared since the company’s last year-end on March 31, 2005:
1. Pampered Puppies had provided daycare for Cher Crowe’s poodle. The total amount of $600 had not yet been billed or recorded.
2. On September 1, 2005, Pampered Puppies had built a new kennel for a total cost of $24,000. It is expected to have a useful life of 10 years with no salvage value at that time. No amortization has been recorded for 2005.
3. A two-year fire comprehensive insurance policy was purchased and effective February 1, 2005 for a cost of $2,400.
4. Salaries for two dog groomers who each earn $85 per day had not yet been paid for three days that they worked in March.
5. On March 31, 2006, the utility bill of $80.00 for the month of March was received but not yet recorded.
6. On January 1, 2005, Pampered Puppies purchased a new van at a cost of $30,000. The van is expected to have a life of 8 years with a salvage value of $2,000.
7. On February 1, 2006, Mrs. Bono paid $270 in advance for six months of grooming for her dog who is groomed regularly every month.
8. An assessment received indicated that the property taxes for 2006 would be $3,000 for the year. The amount is for the calendar year 2006 and will be paid in June 2006.
9. Supplies on hand April 1, 2005 total $600, supplies purchased during the year amounted to $1,350, and a count on March 31, 2006 revealed that $550 of supplies were on hand.
10. The rental of a portable doggie bath had not been paid for the month of March 2006. The rental was $45 per month and Pampered Puppies had agreed to rent the equipment until the end of June 2006.
11. A $10,000 note payable at 6% issued on November 1, 2005 had accrued Interest of $250 owing as at March 31, 2006.
Required:
a) Prepare all necessary adjusting entries for the year ended March 31, 2006. Omit explanations but show calculations.
b) Identify and describe two generally accepted accounting principles (GAAP) that relate to processing adjusting entries.
Colin Hayward is the owner of Pampered Puppies. The following information is available for the year ending March 31, 2006 and no adjusting entries have been prepared since the company’s last year-end on March 31, 2005:
1. Pampered Puppies had provided daycare for Cher Crowe’s poodle. The total amount of $600 had not yet been billed or recorded.
2. On September 1, 2005, Pampered Puppies had built a new kennel for a total cost of $24,000. It is expected to have a useful life of 10 years with no salvage value at that time. No amortization has been recorded for 2005.
3. A two-year fire comprehensive insurance policy was purchased and effective February 1, 2005 for a cost of $2,400.
4. Salaries for two dog groomers who each earn $85 per day had not yet been paid for three days that they worked in March.
5. On March 31, 2006, the utility bill of $80.00 for the month of March was received but not yet recorded.
6. On January 1, 2005, Pampered Puppies purchased a new van at a cost of $30,000. The van is expected to have a life of 8 years with a salvage value of $2,000.
7. On February 1, 2006, Mrs. Bono paid $270 in advance for six months of grooming for her dog who is groomed regularly every month.
8. An assessment received indicated that the property taxes for 2006 would be $3,000 for the year. The amount is for the calendar year 2006 and will be paid in June 2006.
9. Supplies on hand April 1, 2005 total $600, supplies purchased during the year amounted to $1,350, and a count on March 31, 2006 revealed that $550 of supplies were on hand.
10. The rental of a portable doggie bath had not been paid for the month of March 2006. The rental was $45 per month and Pampered Puppies had agreed to rent the equipment until the end of June 2006.
11. A $10,000 note payable at 6% issued on November 1, 2005 had accrued Interest of $250 owing as at March 31, 2006.
Required:
a) Prepare all necessary adjusting entries for the year ended March 31, 2006. Omit explanations but show calculations. (18 marks)
b) Identify and describe two generally accepted accounting principles (GAAP) that relate to processing adjusting entries. (2 marks)
Answers:
a)
Date Account Titles and Explanation PR Debit Credit
Mar31 Account receivable 600
Fees to earned 600
2 Amortization kennel expense 1,400
Accumulated amortization kennel 1,400
3 Insurance expense 1,200
Prepaid insurance 2400/2years= 100*12 1,200
4 Wage expense 510
Wage payable 510
5 Utilities expenses 80
Utilities payable 80
6 Accumulated van expense 3500
Accumulated amortization van 3500
7 Dog services expense 135
Prepaid dog services 135
8 No entry required
9 Supplies expense 1,400
Offices supplies 1,400
600+1350-550
10 Rent expense 45
Rent payable 45
11 Interest expense 300
Interest payable 300
please can you let me know if all these is correct Thanks
