Question

Cr. (5) Question 2 The following account balances are taken from the General Ledger of Bond Lid. on 31 December 2018, the end of its fiscal year. Dr. (5) Cash 50,250 Prepaid insurance 7,000 Accounts Receivable 79.500 Inventories, 31 December 2018 94,700 Land (cost) 80,000 Buildings (cost) 247,600 Furniture and Fixtures (cost) 15.000 Allowance for Doubtful Accounts 650 Accumulated Depreciation - Buildings 18,000 Accumulated Depreciation - Furniture and Fixture 9,000 Loans Payable (due in 2020) 18,000 Accounts Payable 72,700 Share Capital (Ordinary share, no par value) 260,000 Retained earnings 120,125 Sales 770,000 Sales return and Allowances 27.000 Cost of Goods Sold 465,800 Utilities expenses Other administrative expenses 10,200 Salaries Expenses 89.000 Sales commissions 71,325 Insurance Expenses 12.000 Interest Expenses 2.400 $1.268.475 SL.268.475 16700 Information necessary to prepare the year-end adjusting entries and 2018 financial statements: 1 Depreciation (to nearest month for additions during the year) Furniture and fixtures, 10%, Buildings, 5% Included in Buildings were additions completed on June 2018 costing 890,000 2. It was determined that the "Allowance for Doubtful Accounts account at 31 December 2018 should be 54.575 3. Prepaid insurance at 31 December 2018 should be 55,000 4 Bond Lid. sold goods at a selling price of $12.000 (cost $8,000) to a customer on 30 December 2018. All sales are on credit. No entries for this sale have been recorded. 5. Accrued expenses at year-end include sales commissions of $900 and interest on loans payable or 5120 Taxes payable estimated as $10,000 7. On 30 December 2018, the board of directors declared dividends of $7,200 on ordinary shares, payable 28 January 2019. to shardholders of record 15 January 2019. The utilities expenses and bad debt expenses should be classified as administrative expenses. The salaries expenses should be allocated 30% to selling and distribution expenses and 70% to administrative expenses. The insurance expenses should be allocated 60% to administrative expenses and 40% to selling and distribution expenses. 6. 8

Prepare the necessary journal entries for year-ended 31 December 2018

Answer 1

No.	General Journal	Debit	Credit
		$	$
1.	Depreciation Expense	11,630
	Accumulated Depreiation : Buildings		10,130
	Accumulated Depreiation : Furniture & Fixtures		1,500
2.	Bad Debt Expense	3,925
	Allowance for Doubtful Accounts		3,925
3.	Insurance Expense	2,000
	Prepaid Insurance		2,000
4. a.	Accounts Receivable	12,000
	Sales		12,000
4.b.	Cost of Goods Sold	8,000
	Inventory		8,000
5.	Sales Commissions	900
	Interest Expense	120
	Accrued Expenses		1,020
6.	Tax Expense	10,000
	Taxes Payable		10,000
7.	Dividends	7,200
	Dividends Payable		7,200