Workshop 5 Questions and Solutions
PSA3.2
The unadjusted trial balance at 30 June 2017 for Maxi Services Ltd is as follows.
MAXI SERVICES LTD Trial balance as at 30 June 2017
No. Account name Debit Credit
100 Cash $ 54 800
104 Accounts Receivable 15 000
112 Prepaid Insurance 3 200
113 Supplies 1 500
130 Office Equipment 30 000
131 Accumulated Depreciation $ 20 000
200 Accounts Payable 7 400
213 Service Revenue Received in Advance 4 000
300 Share Capital 60 000
310 Retained Earnings 7 500
400 Service Revenue 46 800
500 Salaries Expense 34 000
510 Rent Expense 2 000
515 Insurance Expense 1 200
530 Electricity Expense 4 000
$145 700 $145 700
The chart of accounts for Maxi Services Ltd contains the following accounts in addition to those listed on the trial balance: 218 Electricity Payable, 215 Salaries Payable, 520 Depreciation Expense, and 505 Supplies Expense.
Other data:
1. Supplies on hand at 30 June total $1000.
2. An electricity bill for $300 for June has not been recorded and will not be paid until next month.
3. The balance of the prepaid insurance account is the annual premium for insurance commencing 1 January 2017.
4. Services were performed during the current period in relation to $3000 of Revenue Received in Advance.
5. Salaries of $4600 are owed at 30 June.
6. Depreciation expense for the year is $4000.
7. Invoices representing $4400 of services performed during the month have not been recorded as of 30 June 2017.
Required
(a) Prepare the adjusting entries from the information provided.
(b) Using T accounts, enter the totals from the trial balance as beginning account balances and then post the adjusting entries to the ledger accounts.
(c) Prepare an adjusted trial balance as at 30 June 2017.
(d) Calculate profit or loss for the year ended 30 June 2017.
(e) If the business wanted to report a higher profit which of the adjusting...