1. Business
  2. Accounting
  3. what would be the correct closing entries for the following...

Question: what would be the correct closing entries for the following...

Question details

What would be the correct closing entries for the following:

  1. The notes payable balance relates to a bank loan obtained in 2018 that is payable in full on august 31,2023. the loan agreement specifies that Clarke pay interest annually on august 31 at a rate of 7.05%. Clarke's bookkeeper made the proper entry for the first interest payment.
  2. On September 20,2019, Clarke paid $53,952 for ads to run evenly over a 10-month period, starting October 1,2019.
  3. In November 2019, Clarke received $129,320 from a client as a deposit on a major new engagement. As of December 31, 2019, Clarke had completed $41,715 of these services.
  4. Clarke operates 5 days a week, Mondays through Fridays. Employees are paid each Monday, for hours worked through the previous Friday. On Monday, December 30, 2019, the last pay day in 2019, Clarke paid its employees for hours worked during the week of December 23-27. The employees then worked their regular schedule through the end of the year. Clarke’s payroll averages $10,325 per day.
  5. On June 1, 2019, Clarke signed a lease to rent additional building space. On that date, Clarke prepaid the first 18 months of rent totaling $59,202. The prepayment covers the period June 2019 through November 2020. Note – Contrary to the company’s normal practice, Clarke’s bookkeeper recorded the prepayment into the Rent Expense account. Give the adjusting entry needed when a company uses the expense approach to record a payment in advance.
  6. Clarke performed $118,731 of engineering services for several clients in December 2019 that it has not yet billed, recorded or collected.
  7. Clarke’s Office Supplies account at the beginning of 2019 had a balance of $14,320. In August, the company purchased an additional $25,095 of supplies. A physical count at year-end 2019 shows that $29,170 of the supplies remain on hand.
  8. Clarke purchased its buildings in 2011 and its equipment in 2016. Clarke depreciates its fixed assets according to the straight-line method. For the buildings, it uses estimates of 40 years for the useful life and $180,000 for the salvage value. For the equipment, it uses estimates of 8 years for the useful life and $60,000 for the salvage value.
  9. Clarke estimates that 8.77% of the 2019 year-end accounts receivable balance will not be collected.
  10. The company’s income tax rate for the year is 25%. (Hint – The income tax rate is applied to the company’s income after all revenues and expenses have been considered except for the income tax charge.)

These are the adjusting entries:

Adjusting Journal Entry for December 19
1) Interest Expense $5,576
        Interest Payable $5,576
2)Advertising 16,186
        Prepiad Advertising 16,186
3) Unearned Revenue 41,715
        Service Revenue 41,715
4) Salaries and Wages Expense 20,650
        Salaries and Wages Payable 20,650
5) Prepaid Rent 36,179
        Rent Expense 36,179
6) Unearned Revenue 118,731
        Accounts Recievable 118,731
7) Supplies Expense 10,245
       Supplies 10,245
8) Depreciation-Building 18,468
Depreciation-Equipment 83,797
       Accumlated Depreciation-Building 18,468
       Accumlated Depreciation-Equipment 83,797
9) Bad Debt Expense 44,496
      Allowance for Doubtful Accounts 44,496
10) Tax 225,635
        Provision of Tax 225,635
Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution