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Q1 Here Is The Post-Adjustment Trial Balance of Status Cymbal LTD at 30 June 2019

The document provides a post-closing trial balance for Status Cymbal Ltd as of June 30, 2019. It lists account balances and requires the preparation of closing entries, a post-closing trial balance, and reversing entries. The solution provides the closing entries to close revenue and expense accounts to retained earnings. It presents a post-closing trial balance and the reversing entries to reopen the temporary closing accounts.

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kiet
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74 views

Q1 Here Is The Post-Adjustment Trial Balance of Status Cymbal LTD at 30 June 2019

The document provides a post-closing trial balance for Status Cymbal Ltd as of June 30, 2019. It lists account balances and requires the preparation of closing entries, a post-closing trial balance, and reversing entries. The solution provides the closing entries to close revenue and expense accounts to retained earnings. It presents a post-closing trial balance and the reversing entries to reopen the temporary closing accounts.

Uploaded by

kiet
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Q1

Here is the post-adjustment trial balance of Status Cymbal Ltd at 30 June 2019.

Dr Cr
$ $
Cash 36 000
Accounts receivable 208 000
Allowance for doubtful debts 19 000
Inventory 207 000
Prepaid insurance 72 000
Prepaid rent 24 000
Buildings 540 000
Motor vehicles 90 000
Accumulated depreciation-Building 60 750
Accumulated depreciation-Motor vehicles 70 000
Accounts payable 230 000
Commissions payable 11 100
Accrued wages 42 000
Income tax payable 39 000
Loan 189 000
Share capital 390 000
Retained profits 120 000
Sales 382 000
Cost of goods sold 253 000
Depreciation expense 6 750
Rent expense 24 000
Wages expense 42 000
Insurance expense 6 000
Other expenses 19 000
Bad debts expense 14 000
Commission expense 11 100
1 552 850 1 552 850

Additional information:
Cost of goods sold is an expense account.
Prepaid expenses are initially recorded as asset.

Require:
Prepare closing entries.
Prepare post-closing trial balance.
Prepare reversing entries.
Solution
Date Particulars Debit Credit
30 June 2019 Sales 382 000
Profit or loss summary 382 000

30 June 2019 Profit or loss summary 375 850


Cost of goods sold 253 000
Wages expense 42 000
Depreciation expense 6 750
Rent expense 24 000
Other expenses 19 000
Bad debts expense 14 000
Commission expense 11 100
Insurance expense 6 000

30 June 2019 Profit or loss summary 6 150


Retained earnings 6 150

Status Cymbal Ltd


Post-closing trial balance at 30 June 2019
Dr Cr
$ $
Cash 36 000
Accounts receivable 208 000
Allowance for doubtful debts 19 000
Inventory 207 000
Prepaid insurance 72 000
Prepaid rent 24 000
Buildings 540 000
Motor vehicles 90 000
Accumulated depreciation-Building 60 750
Accumulated depreciation-Motor vehicles 70 000
Accounts payable 230 000
Commissions payable 11 100
Accrued wages 42 000
Income tax payable 39 000
Loan 189 000
Share capital 390 000
Retained profits 126 150
1 177 000 1 177 000

Date Particulars Debit Credit


1 July 2019 Accrued wages 42 000
Wages expense 42 000

1 July 2019 Commissions payable 11 100


Commissions expense 11 100
Q2
On 1 July 2018, Lucia Ltd had accounts receivable of $39,000 and an allowance for doubtful
debts of $1,500 CR.

On 8 November 2018, a debtor named Smith Ltd was declared bankrupt and unable to pay
$2,000 owed to Lucia Ltd.

On 24 December 2018, liquidators declared that “20 cents in the dollar would be repaid for
every debt owed by Smith Ltd”. Lucia Ltd received the amount on 1 April 2019.

After a re-assessment of their credit risk at year-end (30 June 2019), the credit manager of
Lucia Ltd decided that the allowance for doubtful debts should be increased to 3% of
accounts receivable.

Required:
(a) Show the general journal entry to write-off the bad debt.
(b) Show the general journal entries to record the reinstatement of the bad debt and the
subsequent cash collection.
(c) Show the general journal entry to record the adjusting entry at balance day (30 June
2019).

Solution:
Date Particulars DR CR
8/11/18 Allowance for doubtful debts 2,000
Accounts receivable 2,000

Date Particulars DR CR
24/12/18 Accounts receivable 400
Allowance for doubtful debts 400

Date Particulars DR CR
1/4/19 Cash 400
Accounts receivable 400

Date Particulars DR CR
30/6/19 Bad and doubtful debts expense 1,210
Allowance for doubtful debts 1,210

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