[gemini_shooter]

Can someone help me with this question, I have added most of the entries for this adjusted trial but don't understand some entries to make.

The following list of accounts and their balances represents the unadjusted trial balance of Alt Company at December 31, 2004:
Cash $ 32,690
Short-term Investment 70,000
Accounts Receivable 69,000
Allowance for Doubtful Accounts $ 500
Merchandise Inventory 54,720
Prepaid Rent 30,000
Plant and Equipment 156,000
Accumulated Depreciation 14,740
Accounts Payable 11,370
Bonds Payable 90,000
Common Stock 170,000
Retained Earnings 97,180
Sales 218,400
Cost of Goods Sold 154,400
Transportation-Out 11,000
Salaries and Wages Expense 32,000
Interest Expense 2,040
Rent Revenue 18,000
Miscellaneous Expense 890
Insurance Expense 7,450
$620,190 $620,190
Additional Data:

1. The balance in the Insurance Expense account contains the premium costs of three policies:
Policy 1, remaining cost of $2,550, 1-yr. term, taken out on May 1, 2003;
Policy 2, original cost of $3,600, 3-yr. term, taken out on Oct. 1, 2004;
Policy 3, original cost of $1,300, 1-yr. term, taken out on Jan. 1, 2004.

2. On September 30, 2004, Alt received $18,000 rent from its lessee for an eighteen month lease beginning on that date.

3. The regular rate of depreciation is 10% per year. Acquisitions and retirements during a year are depreciated at half this rate. There were no purchases during the year. On December 31, 2003, the balance of the Plant and Equipment account was $260,000.

4. On December 28, 2004, the bookkeeper incorrectly credited sales for a receipt on account in the amount of $10,000.

5. At December 31, 2004, salaries accrued but unpaid were $4,200.

6. Alt estimates that 2% of sales will become uncollectible.

7. On August 1, 2004, Alt purchased, as a short-term investment, 70 $1,000, 9% bonds of Allen Corp. at par. The bonds mature on August 1, 2005. Interest payment dates are July 31 and January 31.

8. On April 30, 2004, Alt rented a warehouse for $2,500 per month, paying $30,000 in advance.

Instructions
Record the necessary correcting and adjusting entries.

Ans.

1.
a. Policy 1 – no entry since policy expired on May 1st 2004

b. Prepaid insurance (policy 2) $3,300(DB)

Insurance Expense $3,300(CR)

c. Policy 3 – no entry since policy expired on Dec 31st 2004

2. Rent Revenue $15,000(DB)

Prepaid Rent $15,000(CR)

3. NEED SOME HELP WITH THIS ENTRY

4. NEED SOME HELP WITH THIS ENTRY

5. Salary Expense $4,200(DR)

Salaries Payable $4,200(CR)

6. Bad Debt expense $XX

Allowance for uncollectible $XX ? (what is the correct amount here?)

7. Interest Expense $2,625(DR)

Interest Payable $2,625(CR)

8. Rent Expense $20,000

Prepaid Rent $20,000

[pready]

1. Looks Correct
2. Debit Rent Revenue for 15,000
Credit Unearned Rent Revenue for 15,000 (This is a Liability)
3. Debit Depreciation Expense for 15,600
Credit Accumulated Depreciation for 15,600
4. Debit Sales Revenue for 10,000
Credit Account Receivables for 10,000
5. Looks Correct
6. Debit Bad Debt Expense for 4,368 (Net Sales X 2%)
Credit Allowance for Doubtful Accounts for 4,368
7. Debit Interest Receivable for 2,625
Credit Interest Revenue for 2,625
8. Debit Rent Expense for 20,000
Credit PrePaid Rent for 20,000