Question 1 Cash versus accrual accounting

During March, Thuy Bui’s business performed services for a specific customer for which the fee was $9000. Payment was received in the following April.

1. Was the revenue earned in March or April?
2. What journal entries should be recorded under accrual accounting in March and April?
3. What journal entries should be recorded under cash accounting in March and April?

Question 2 Adjusting entries

 The financial year for Drip Dry Cleaning Services ends on 30 June. Using the following information, make the necessary adjusting entries at year-end. Ignore GST.

1. On 15 February, Danielle Drip’s business borrowed $16 000 from Northern Bank at 8% interest. The principal and interest are payable on 15 August.
2. Rent of $3600 for the 6-month period ending 31 July is due to be paid in August.
3. The annual depreciation on equipment is estimated to be $7200. The 1 July balance in the Accumulated Depreciation account was $15 600.
4. Drip Dry Cleaning Services purchased a 1-year insurance policy on 1 March of the current year for $660. A 3-year policy was purchased on 1 November of the previous year for $2700. Both purchases were recorded by debiting Prepaid Insurance.
5. The business has two part-time employees who each earn $220 a day. They both worked the last 3 days in June for which they have not yet been paid.
6. On 1 June, the Highup Hotel paid the business $2100 in advance for doing their dry cleaning for the next 3 months. This was recorded by a credit to Unearned Dry Cleaning Revenue.
7. Water for June of $850 is unpaid and unrecorded.
8. The supplies account had a $280 debit balance on 1 July. Supplies of $1560 were purchased during the year and $190 of supplies are on hand as at 30 June.

Required

Prepare the necessary adjusting entries at 30 June.

Questions 3 Preparing a worksheet

 The unadjusted trial balance of Helena’s Hire Cars is shown below (ignore GST).

Additional information

1. Petrol purchased on credit for $680 and used during the last week in June has not been paid for or recorded.
2. A physical count showed office supplies totalling $340 were still on hand at 30 June.
3. Depreciation for 1 year on the hire cars is $12 400. Depreciation on the office equipment is $980.
4. The balance in the Advertising Expense account includes $600 prepayment for an advertising campaign beginning in July.
5. The balance in the Unearned Hire Fees account includes $1800 received in May for hire services completed in June.
6. The June insurance premium of $700 is overdue and has not been recorded. A tax invoice has not been received.
7. Wages earned but not paid amounted to $1150.

Required:

Prepare a 10-column worksheet for the year ended 30 June 2019.

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