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Question 1
Journalise any necessary adjusting entries for ABC Accounting in the General Journal at 30thJune 2018. Explanations/Narrations are NOT required.
- On the first of April paid rent in advance for 12 months, $15,000.
- Received $4,000 Fees in Advance on 1st March 2018. At the 30th 25% of the work has been completed.
- Employee Salaries owed for Monday to Wednesday of a five-day working week; the weekly payroll is $12,500.
- Depreciation for one month on Office Equipment costing $5,000 with a salvage value of zero and a useful life of 10 years.
- Interest expense accrued $1,300.
Question 2
Explain why accrual accounting provides more complete information than cash basis accounting.
Question 3
Spanners Accounting Practice reported the following account balances (all these accounts have normal balances) at 30 November 2017:
| Sales and Marketing expense | $2,100 | Cash | $1,100 |
| Other assets | $700 | Service Revenue | $5,500 |
| Depreciation expense | $800 | Accounts Payable | $500 |
| Non-current liabilities | $600 | Accounts Receivable | $900 |
| Capital – Spanners | $3,500 | Drawings -Spanners | $500 |
Required: Journalise Spanner’s closing entries, as needed for these accounts.
Question 4
Why are closing entries necessary?