Exercise for Chapter 1: Adjusted trial balance

Submission date: 28 September 2016 through online learning system

OPARA Bhd. opened for business on 1 June 2015. Its accounts from the ledger journal on 31
August 2015 are as follows.

Account Balance

Cash RM19,600
Prepaid Insurance 4,500
Supplies 2,600
Land 20,000
Buildings 120,000
Equipment 16,000
Accounts Payable 4,500
Unearned Rent Revenue 4,600
Mortgage Payable 50,000
Share capital 100,000
Dividends 5,000
Rent revenue 86,200
Salaries and wages expense 44,800
Utilities expenses 9,200
Maintenance and repairs expense 3,600

Other data that not recorded yet is as follows:

1. The balance in prepaid insurance is a one-year premium paid on 1 June 2015.
2. An inventory count on 31 August shows RM 650 of supplies on hand.
3. Annual depreciation rates are 4% for buildings and 10% for equipment. Salvage value of both
is estimated to be 10% of cost each. Both assets were purchased on 1 June 2015.
4. Unearned Rent Revenue of RM3,800 was earned prior to 31 August.
5. Salaries of RM375 were unpaid at 31August.
6. Rentals of RM800 were due from tenants at 31August.
7. The mortgage interest rate is 8% per year. The mortgage dated 1 June 2015.

REQUIRED:

(a) Prepare the Unadjusted Trial Balance of OPARA Bhd on 31August 2015
(b) Journalize the adjusting entries on 31 August for the 3-month period 1 June –31August
2015. (Omit explanations.)
(c) Prepare an adjusted trial balance on 31August 2015.
 OPARA BHD
UNADJUSTEDTRIAL BALANCE
31 AUGUST, 2015

Debit Credit
Cash RM 19,600
Prepaid Insurance 4,500
Supplies 2,600
Land 20,000
Buildings 120,000
Equipment 16,000
Accounts Payable RM4,500
Unearned Rent Revenue 4,600
Mortgage Payable 50,000
Common Stock 100,000
Dividends 5,000
Rent Revenue 86,200
Salaries and Wages Expense 44,800
Utilities Expenses 9,200
Maintenance and Repairs Expense 3,600
RM245,300 RM245,300

(b) Adjusted Entries on 31 August 2015

1. Aug. 31 Insurance Expense (RM4,500 X 3/12)…… 1,125

Insurance Expense Payable………… 1,125

2. Aug. 31 Supplies Expense (RM2,600 – RM650) ...........................................................
1,950
Supplies .....................................................................................................
1,950

3. Aug. 31 Depreciation Expense........................................................................................

1,080
Accumulated Depreciation—
Buildings ................................................................................................
1,080
(RM120,000 – RM12,000 = RM108,000;
RM108,000 X 4% = RM4,320 per year;
RM4,320 X 3/12 = RM1,080)

Aug. 31 Depreciation Expense........................................................................................

360
Accumulated Depreciation—
Equipment ..............................................................................................
360
(RM16,000 – RM1,600 = RM14,400;
RM14,400 X 10% = RM1,440;
RM1,440 X 3/12 = RM360)

4. Aug. 31 Unearned Rent Revenue ....................................................................................

3,800
Rent Revenue ............................................................................................
3,800

5. Aug. 31 Salaries and Wages Expense .............................................................................

375
Salaries and Wages Payable .....................................................................
375

6. Aug. 31 Accounts Receivable .........................................................................................

800
 Rent Revenue ............................................................................................
800

7. Aug. 31 Interest Expense ................................................................................................

1,000
Interest Payable
[(RM50,000 X 8%) X 3/12] .................................................................
1,000

(C) OPARA BhD

Adjusted Trial Balance

August 31, 2015

Debit Credit

Cash............................................................................................................ RM
19,600

Accounts Receivable .................................................................................. 800

Prepaid Insurance (RM4,500 – RM1,125) ................................................. 3,375

Supplies (RM2,600 – RM1,950) ................................................................ 650

Land ........................................................................................................... 20,000

Buildings .................................................................................................... 120,000

Accumulated Depreciation—Buildings ..................................................... RM 1,080

Equipment .................................................................................................. 16,000

Accumulated Depreciation—Equipment ................................................... 360

Accounts Payable ....................................................................................... 4,500

Unearned Rent Revenue (RM4,600 – RM3,800)....................................... 800

Salaries and Wages Payable ....................................................................... 375

Interest Payable .......................................................................................... 1,000

Mortgage Payable ...................................................................................... 50,000

Share Capital—Ordinary............................................................................ 100,000

Retained Earnings ......................................................................................

Dividends ................................................................................................... 5,000

Rent Revenue (RM86,200 + RM3,800 + RM800) .................................... 90,800

Salaries and Wages Expense (RM44,800 + RM375) ................................. 45,175

Utilities Expense ........................................................................................ 9,200

Maintenance and Repairs Expense............................................................. 3,600

Insurance Expense...................................................................................... 1,125

Supplies Expense ....................................................................................... 1,950

Depreciation Expense—(Buildings) .......................................................... 1,080

Depreciation Expense—(Equipment) ........................................................ 360

Interest Expense ......................................................................................... 1,000

RM248,915 RM248,915