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    Unruh Company

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    Unruh Company

    General Journal adjusting entries
    Date Account/Description Debit Credit
    Adjusting Entries
    Sep. 30 Supplies Expense 1,500
    Office Supplies 1,500
    Sep. 30 Insurance Expense 1,600
    Prepaid Insurance 1,600
    Sep. 30 Depreciation Expense 5,400
    Accumulated Depreciation-Office Equipment 5,400
    Sep. 30 Unearned Service Revenue 700
    Service Revenue 700
    Sep. 30 Wage Expense 500
    Wage Payable 500

    Calculations
    a. 2,700 - 1,200 = 1,500
    b. 4,800 - 3,200 = 1,600
    c. 5,400
    d. 1,200 - 500 = 700
    e. 500

    LOST-THE-MOST'S FITNESS CENTER
    Service Revenue 105,000
    Interest Revenue 8,000
    Less: Utilities Expense 12,000
    Salaries Expense 30,000
    Supplies Expense 9,000
    Insurance Expense 6,000
    Depreciation Expense, Building 25,000
    Depreciation Expense, Equipment 2,000 84,000
    Net Income 29,000

    Lost-the-Most, Capital 195,000
    Add: Net Income 29,000
    Less: Drawing 15,000
    Lost-the-Most, Capital as of 12/31/2006 209,000

    2. Prepare end of the year General Journal closing entries (without explainations) for the Fitness Center.

    Date Account/Description Debit Credit
    Adjusting Entries
    Dec. 31 Service Revenue 105,000
    Interest Revenue 8,000
    Income Summary 113,000

    Dec. 31 Income Summary 84,000
    Utilities Expense 12,000
    Salaries Expense 30,000
    Supplies Expense 9,000
    Insurance Expense 6,000
    Depreciation Expense, Building 25,000
    Depreciation Expense, Equipment 2,000

    Dec. 31 Lost-the-Most, Capital 15,000
    Lost-the-Most, Drawing 15,000

    Dec. 31 Income Summary 29,000
    Lost-the-Most, Capital 29,000

    3

    Lost-the-Most's Fitness Center
    Balance Sheet
    December 31, 2006

    Assets
    Cash 11,000
    Accounts Receivable 25,000
    Supplies 4,000
    Prepaid Insurance 8,000
    Land 10,000
    Buildings 215,000
    Accumulated Depreciation, Building (100,000) 115,000
    Equipment 65,000
    Accumulated Depreciation, Equipment (20,000) 45,000
    Patents 10,000
    Total Assets 228,000

    Liabilities & Equity
    Accounts Payable 7,000
    Wages Payable 2,000
    Notes Payable 10,000
    Total Liabilities 19,000

    Lost-the-Most, Capital 209,000
    Total Liabilities & Equity 228,000

    4. Compute Bad Debts Expense for Moatz Company based on the following information:

    a) Net credit sales = 500,000 - 20,000 = 480,000
    Uncollectible = 2% x 480,000 = 9,600
    Bad Debt Expense = 9,600 - 5,000 = 4,600

    b. Accounts Receivable 120,000
    Uncollectible = 4% x 120,000 = 4,800
    Bad Debt Expense = 4,800 - 200 = 4,600

    5. Goyal Company uses the allowance method for estimating uncollectible accounts.

    Date Account Debit Credit
    Jan. 5 Accounts Receivable 1,200
    Merchandise Inventory 1,200
    Apr. 15 Cash 200
    Accounts Receivable 200
    Aug. 21 Allowance for Doubtful ...

    Solution Summary

    This solution is comprised of a detailed explanation to prepare the General Journal adjusting entries that should be made by Unruh Company on September 30.

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