Accounting Fundamentals in Society
WEEK 6: Hoggett et al (2018) chapter 4: EX 4.12, 4.15;
PR 4.22 (no GST), 4.25 & 4.30
EXERCISE QUESTIONS
Exercise 4.12 - Adjusting entries
Selected accounts of Amanda’s Art Supplies are shown below at 30 June of the current year
before any adjusting entries have been made.
Additional information
1. Prepaid insurance represents premiums for 1 year paid on 1 April.
2. Supplies of $430 were on hand at 30 June.
3. Shop shelving, which had been purchased on 1 January, is expected to last 10 years and
have a residual value of $2000.
4. Amanda collected 4 months’ rent in advance on 1 June from a number of tenants.
5. Accrued salaries not recorded as at 30 June are $2400.
Required
(a) Record in the general journal the necessary adjusting entries on 30 June.
1|Page
,(a)
AMANDA’S ART SUPPLIES
General Journal
Date Particulars Debit Credit
June 30 Insurance Expense 1 125
Prepaid Insurance 1 125
Insurance expired. ($4500 × 3/12)
Supplies Expense 290
Supplies 290
Supplies used. ($720 – $430)
Depreciation Expense – Shop Shelving 1 100
Accumulated Depreciation – Shop Shelving 1 100
Depreciation on office equipment.
($24 000 – $2000)/10 × 6/12 = $1100)
Unearned Rental Fees 1 200
Rental Fees Revenue 1 200
Rental fees earned for one month.
($4800 ÷ 4)
Salaries Expense 2 400
Salaries Payable 2 400
Accrued salaries.
2|Page
, Exercise 4.15- Adjusting entries and effect on financial statements
In the first column of the schedule presented below are the condensed financial statements for
Melvin Motorvehicle Rentals before adjusting entries were made. The following items were
not reflected in the statements.
1. Rental revenue earned but not collected or recorded, $1500.
2. Depreciation on vehicles not recorded, $14 500.
3. Wages earned by employees but not paid at year-end, $5600.
4. The company requires the first-day rental in advance as a deposit for making a
reservation. The deposit is either deducted from the total rental charges or is forfeited.
During the last week of June, deposits earned were not recorded as revenue, $990.
Required
(a) Prepare the necessary adjusting entries in general journal form.
(b) Determine the effects of the adjustments on the financial statements by completing
the schedule presented.
(c) i. Did profit increase or decrease? By how much?
ii. What was the effect of the adjusting entries on total assets? total liabilities? total equity?
3|Page
WEEK 6: Hoggett et al (2018) chapter 4: EX 4.12, 4.15;
PR 4.22 (no GST), 4.25 & 4.30
EXERCISE QUESTIONS
Exercise 4.12 - Adjusting entries
Selected accounts of Amanda’s Art Supplies are shown below at 30 June of the current year
before any adjusting entries have been made.
Additional information
1. Prepaid insurance represents premiums for 1 year paid on 1 April.
2. Supplies of $430 were on hand at 30 June.
3. Shop shelving, which had been purchased on 1 January, is expected to last 10 years and
have a residual value of $2000.
4. Amanda collected 4 months’ rent in advance on 1 June from a number of tenants.
5. Accrued salaries not recorded as at 30 June are $2400.
Required
(a) Record in the general journal the necessary adjusting entries on 30 June.
1|Page
,(a)
AMANDA’S ART SUPPLIES
General Journal
Date Particulars Debit Credit
June 30 Insurance Expense 1 125
Prepaid Insurance 1 125
Insurance expired. ($4500 × 3/12)
Supplies Expense 290
Supplies 290
Supplies used. ($720 – $430)
Depreciation Expense – Shop Shelving 1 100
Accumulated Depreciation – Shop Shelving 1 100
Depreciation on office equipment.
($24 000 – $2000)/10 × 6/12 = $1100)
Unearned Rental Fees 1 200
Rental Fees Revenue 1 200
Rental fees earned for one month.
($4800 ÷ 4)
Salaries Expense 2 400
Salaries Payable 2 400
Accrued salaries.
2|Page
, Exercise 4.15- Adjusting entries and effect on financial statements
In the first column of the schedule presented below are the condensed financial statements for
Melvin Motorvehicle Rentals before adjusting entries were made. The following items were
not reflected in the statements.
1. Rental revenue earned but not collected or recorded, $1500.
2. Depreciation on vehicles not recorded, $14 500.
3. Wages earned by employees but not paid at year-end, $5600.
4. The company requires the first-day rental in advance as a deposit for making a
reservation. The deposit is either deducted from the total rental charges or is forfeited.
During the last week of June, deposits earned were not recorded as revenue, $990.
Required
(a) Prepare the necessary adjusting entries in general journal form.
(b) Determine the effects of the adjustments on the financial statements by completing
the schedule presented.
(c) i. Did profit increase or decrease? By how much?
ii. What was the effect of the adjusting entries on total assets? total liabilities? total equity?
3|Page
