The unadjusted trial balance of Imagine Ltd at December

31 2014 #1836
The unadjusted trial balance of Imagine Ltd. at December 31,2014, is as follows:Additional
information:1. On November I, 2014, Imagine received 510,200 rent from its lessee for a
12-month lease beginning on that date.This was credited to Rent Revenue.2. Imagine estimates
that 7% of the Accounts Receivable balances on December 31,2014, will be uncollectible.
OnDecember 28, 2014, the bookkeeper incorrectly credited Sales Revenue for a receipt of
$1,000 on account. This error had not yet been corrected on December 31.3. After a physical
count, inventory on hand at December 31, 2014, was $77,000.4. Prepaid insurance contains the
premium costs of two policies: Policy A, cost of$1,320, two-year term, taken out onSeptember 1,
2014; Policy B, cost of $1,620, three-year term, taken out on April 1, 2014.5. The regular rate of
depreciation is I 0% of cost per year. Acquisitions and retirements during a year are depreciated
at half this rate. There were no retirements during the year. On December 31, 2013, the balance
of Equipment was $90,000.6. On April I, 2014, Imagine issued at par value 50 $1,000, II%
bonds maturing on April I, 2017. Interest is paid onApril I and October 1.7. On August I, 2014,
Imagine purchased at par value 18 $1,000, 12% Legume Inc. bonds, maturing on July 31,2016.
Interest is paid on July 31 and January 31.8. On May 30, 2014, Imagine rented a warehouse for
$1,100 per month and debited Prepaid Rent for an advance payment of $13,200.9. Imagine; FV-
NI investments consist of shares with total market value of $9,400 as of December 31, 2014.10.
T he FV-OCI investment is an investment of 500 shares in Yop Inc., with current market value of
$25 per share as of December 31, 2014.Instructions(a) Prepare the year-end adjusting and
correcting entries for December 31, 2014, using the information given. Record the adjusting
entry for inventory using a Cost of Goods Sold account.(b) Indicate which of the adjusting
entries could be reversed.View Solution:
The unadjusted trial balance of Imagine Ltd at December 31 2014

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