Question

Adjusting Entries Adjustment data:

? North Co. estimates that uncollectible accounts receivable at year-end is $3,500.

? The cost of the building $150,000 is being depreciated using the straight-line method over 30 years. The salvage value is $30,000.

? The car owned this year is being depreciated using double –declining-balance method over

? 5 years by using 20% rate for depreciate the car. The car cost $50,000.

? The equipment purchased on May 1, 2017, is being depreciated using the straight-line method over 5 years, with a salvage value of $1,800.

? The patent was acquired on January 1, 2017, $9,000 and has a useful life of 10 years from that date.

? The unearned rent revenue of $6,000 was received on December 1, 2017, for 3 months’ rent.

? The short-term note is dated January 1, 2017, and carry a 9% interest rate.

a) Prepare journal entries for the adjusting entries .

b) Prepare double –declining-balance schedule using 20% rate for depreciate the car.

Answer 1

North Co Adjusting Enteries Date 31.12.2017 Bad debts a/c DDB - Car Particulars Debit in $ Credit in $ double declining balance rate will be 2 x 20%-40%. 3500 To Allowance for uncollectible accounts 3500 Closing Opening Book Value Depre Book Value Year 31.12.2017 Depreciation expense - Building a/c Dr 4000 To Accumulated Depreciation Build 4000 2 30000 150000 30000)30 10800 4 10800 4320 31.12.2017 Depreciation expense - Car a/c Dr 2592 3888 To Accumulated Depreciation - Car 50000 x 2 x 20% 31.12.2017 Depreciation expense - Equip a/c Dr 2840 To Accumulated Depreciation - Equi 2840 16000 1800)/5 Note: Equpment cost assumed 16000 31.12.2017 Amortization Expense Patent a/c Dr 900 To Patent 900 31.12.2017 Unearned Rent Revenue a/c 2000 To Rent Revenue 2000 31.12.2017 Interest expense a/c Dr. 1800 To Interest Payable 1800 20000 x 9% Note: Short term note assumed 20000