Peakhurst Limited had the following trial balance at 1 January 2016:
|Debit $||Credit $|
|Accounts receivable||600 000|
|Prepaid insurance||60 000|
|Prepaid rent||50 000|
|Equipment||1 000 000|
|Allowance for doubtful debt||20 000|
|Accumulated depreciation||200 000|
|Accounts payable||500 000|
|Revenue received in advance||100 000|
|Income tax payable||500 000|
|Share capital||400 000|
|Retained profits||320 000|
|2 610 000||2 610 000|
You are given the following additional information for the year ended 31 December 2016:
- Bad debts of $8000 were written off.
- It was decided that allowance for doubtful debts should be 4 per cent of accounts receivable.
- Prepare journal entries for these transactions.
- Show the T-ledger accounts for the following for the year ended 31 December 2016:
- accounts receivable
- allowance for doubtful debts
- bad debts expense
Perform a bank reconciliation.
- Reconcile Jack Steel’s month end cash balance as of 31 Jul 2019
- Based on your analysis, propose adjusting entries (if any).
Transactions and balances:
- 31 Jul 2019 Bank Statement balance $ 58,791
- 31 Jul 2019 balance per Jack’s records $ 57,371
- Jack received a payment that he has not deposited $ 250
- Jack issued a cheque payable to Pandora’s Jewels to pay for a belated Mother’s Day gift to his grandmother that has not been presented to the bank $ 1,612
- Bank charges for the month of July were $40
- Interest on bank balance credited to Jack’s account $ 98
Murrays Ltd. purchased a new bus for $200,000. The company expects the bus to be used for trips between Sydney and Canberra for 10 years, or 800,000 miles, with an estimated residual value of $30,000 at the end of that time. During the 3rd year the bus was driven 96,000 miles. Calculate the depreciation expense for the 3rd year for each of the methods below. Show your solutions.
- Diminishing balance at 20% p.a.
Banksia Company completed the following transactions during 2018-2019. The annual accounting period ends 30 June 2019.
- Purchased inventory on credit at cost of AUD 16,800; perpetual inventory system is used.
- Received a customer deposit of AUD 18,000 from ABC Ltd for services to be rendered in the future.
- Borrowed AUD 900,000 from the bank on 1 March 2019 by giving the bank a six-month, 9% interest bearing note payable.
- Performed AUD 8,000 of the services paid for by ABC Ltd; the rest will be rendered in August 2019.
- Received the electricity bill for AUD 24,200, which will be paid in early July.
- On 1 June 2019 received rent in advance of AUD 21,600 from XYZ Ltd for a 3 month lease of premises from 1 June until 31 August 2019.
- Wages accrued in the last weekly payroll amounted to AUD 23,000 and will be paid on 5 July 2019.
- Prepare the journal entries for each of these transactions.
- Prepare all adjusting entries required on 30 June 2019.
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