Chapter 3: E3-10

Uhura Resort
Adjusting Entries
Date. Accounts Title and Explanation Ref Dr. ($) Cr. ($)
August Insurance Expense Dr $1,125
31 Prepaid Insurance . $1,125
($4,500/12)X 3 months Cr
.
August Supplies Expense Dr 1,950
31 Supplies . 1,950
($2,600-$650) Cr.
August Depreciation Expense Dr 1,080
31 Accumulated depreciation-Building . 1,080
[($120,000-$12,000)X 4%]X3/12 Cr
.
August Depreciation Expense Dr 360
31 Accumulated depreciation-Equipment . 360
[($16,000-$1,600)X10%]X3/12 Cr
.
August Unearned Rent Revenue Dr 3,800
31 Rent Revenue . 3,800
Cr.
August Salaries and Wages expense Dr 375
31 Salaries and Wages payable . 375
Cr.
August Accounts Receivable Dr 800
31 Rent Revenue . 800
Cr.
August Interest Expense Dr 1,000
31 Interest Payable . 1,000
[$50,000X8%]X3/12 Cr.

Uhura Resort
Adjusting Trial Balance
August 31. 2019
Accounts Title Debit Credit
Cash $19,600
Prepaid Insurance [4,500-1,125] 3,375
Supplies [2,600-1950] 650
Land 20,000
Building 120,000
Equipment 16,000
Accounts Payable $4,500
Unearned Rent Revenue [4,600-3,800] 800
Mortgage Payable 50,000
Share Capital: Ordinary 100,000
Retained Earnings 0
 Dividends 5,000
Rent Revenue [86,200+3,800+800] 90,800
Salaries and Wages expense [44,800+375] 45,175
Utilities expense 9,200
Maintenance expense 3,600
Insurance Expense 1,125
Supplies Expense 1,950
Depreciation Expense 1,080
Accumulated depreciation-Building 1,080
Depreciation Expense 360
Accumulated depreciation-Equipment 360
Salaries and Wages payable 375
Accounts Receivable 800
Interest Expense 1,000
Interest Payable 1,000
Total $248,815 $248,815

Alternative Approach [Prepaid Expense and Unearned Revenue]

Normal Approach
Jan 01 Supplies $3,000 Unearned Revenue $3,300
Dec 31: Supplies on Hand 1,000 1/3 of unearned revenue was earned.

Jan 01: [Asset] Jan 01: [Liability]

Supplies Dr 3,000 Cash Dr 3,300
Cash Cr 3,000 Unearned service revenue Cr 3,300

Dec 31: Adjusting entries Dec 31: Adjusting entries {Revenue}

Supplies Expense Dr 2,000 Unearned Service Revenue Dr 1,100
Supplies Cr 2,000 Service Revenue Cr 1,100
[Expense]

Alternative Approach: Jan 01: Alternative Approach: Jan 01:

Supplies expense Dr 3,000 Cash Dr 3,300

Cash Cr 3,000 Service Revenue Cr 3,300
[Expense] [Revenue]
Dec 31: Adjusting entries Dec 31: Adjusting entries
Supplies Dr 1,000 Service Revenue Dr 2,200
Supplies Expense Cr 1,000 Unearned Service Revenue Cr 2,200
[Asset] [Liability]
 P3-5
Adjusting Entries
Re Dr.
Date. Accounts Title and Explanation Cr. (Tk.)
f (Tk.)
Dec 31 Depreciation Expense Dr. 10,500
Accumulated depreciation-Equipment Cr. 10,500
[(192,000-24,000)/16] .
Dec 31 Interest Expense Dr. 1,400
Interest Payable Cr. 1,400
[90,000 X 8%]X 70/360]
Dec 31 Admission Revenue Dr. 60,000
Unearned Admission Revenue Cr. 60,00
[2,000 coupon X 30]
Dec 31 Prepaid Advertisement Dr. 1,100
Advertisement expense Cr. 1,100
Dec 31 Salary and Wages expense Dr. 4,700
Salary and Wages payable Cr. 4,700

E3-16
Closing Entries
Dr.
Date. Accounts Title and Explanation Ref Cr. (Tk.)
(Tk.)
Dec 31 Sales Revenue Dr 390,000
Income Summary . 390,000
[To close revenues] Cr.
Dec 31 Income Summary Dr 346,700
Cost of goods sold . 235,700
Selling Expense Cr. 16,000
Administrative Expense Cr. 38,000
Income Tax expense Cr. 30,000
Sales Return & Allowance Cr. 12,000
Sales discount Cr. 15,000
[To close all expenses] Cr.
Dec 31 Income Summary Dr 43,300
Retained Earnings . 43,300
[To transfer net income to retained Cr.
earnings]
Dec 31 Retained Earnings Dr 18,000
Dividends . 18,000
[To close dividends] Cr