Question : 100. On the next page the unadjusted trial balance of Danos : 1230499

 

100. On the next page is the unadjusted trial balance of Danos Department Store on December 31, Year 6. The company closes its books annually. You are asked to indicate the adjusting entries required on December 31, Year 6 to conform the books to accrual accounting principles. 

1.

Danos neglected to record unpaid charges for telephone services for December in the amount of $13,700.

2.

The balance in the Advances from Customers account represents the amount received from a lessee on November 1, Year 6 for the rental of excess warehouse space owned by Danos. The rental period is for the six months ended April 30, Year 7.

3.

Danos acquired a warehouse on July 1, Year 6 and correctly recorded the acquisition cost of $600,000 in its accounts. The warehouse has a 30-year estimated life and zero salvage value. Danos neglected to record depreciation on the warehouse, although it has correctly recorded depreciation on all other depreciable assets for Year 6.

4.

Danos debited Selling and Administrative Expenses for salaries paid during Year 6. Salaries remaining unpaid as of December 31, Year 6 total $3,700.

5.

Sales made on account during the last two days of December, Year 6 totaled $12,000. Danos incorrectly recorded these sales by debiting accounts payable. These accounts had not been collected by year end.

6.

Danos sold a piece of equipment during Year 6 for $1,800 that had originally cost $6,000 and had accumulated depreciation of $4,200. Danos recorded this sale by debiting Cash for $1,800 and crediting Equipment for $1,800.

7.

The balance in the Prepaid Insurance account represents the balance as of January 1, Year 6. Danos renewed its only insurance policy on March 1, Year 6 and charged the one-year premium of $5,100 to Selling and Administrative Expenses.

8.

A physical inventory of store supplies on December 31, Year 6 revealed that supplies costing $1,850 were on hand.

9.

The note receivable was received from a corporate officer on December 1, Year 6. The note bears interest at 6 percent. The interest is payable with the principal amount borrowed at maturity on June 1, Year 7.

 

 

 

Danos Department StoreUnadjusted Trial BalanceDecember 31, Year 6

Letter

Account

Debit

Credit

A.

Accounts Payable

—

$   390,000

B.

Accounts Receivable

$   490,000

—

C.

Accumulated Depreciation

—

980,000

D.

Advances from Customers

—

3,600

E.

Building

1,500,000

—

F.

Bonds Payable

—

1,200,000

G.

Cash

12,700

—

H.

Common Stock

—

400,000

I.

Cost of Goods Sold

2,290,000

—

J.

Depreciation Expense

150,000

—

K.

Equipment

620,000

—

L.

Interest Expense

96,000

—

M.

Interest Receivable

—

—

N.

Interest Revenue

—

—

O.

Merchandise Inventory

570,000

—

P.

Note Receivable

30,000

—

Q.

Other Current Liabilities

—

130,000

R.

Prepaid Insurance

800

—

S.

Rent Revenue

—

—

T.

Retained Earnings

—

89,040

U.

Salaries Payable

—

4,500

V.

Sales Revenue

—

3,000,000

W.

Selling and Administrative Expenses

430,000

—

X.

Supplies Inventory

         7,640

               —

 

Totals

$6,197,140

$6,197,140

 

 

 

 

Required:Indicate the letters in the unadjusted trial balance corresponding to the accounts debited and credited and the amount in each debit and credit entry. Use only the accounts listed in the unadjusted trial balance. More than one account may be debited or credited in a particular adjusting entry. If no adjusting entry is needed, indicate “No Entry” by the number of the entry. Remember that asset increases and liability and shareholders’ equity decreases are recorded with debits and asset decreases and liability and shareholders’ equity increases are recorded with credits.