Reference no: EM132974132

The financial year for Bankstown Rental Services ends on 30 June.

Required

Problem (a) Using the following information, make the necessary adjusting entries.

i. The $765 telephone expense is unpaid and unrecorded at 30 June

ii. The balance in Accumulated Depreciation at the beginning of the financial year was $51 300. Annual depreciation on equipment is estimated to be $34 200.

iii. Rent of office premises of $3165 for the 3-month period ending 31 July is due to be paid in July.

iv. Bankstown Rental Services borrowed $70 000 from BANK Bank on 15 March. The principal, plus 8% interest, is payable on 15 September. Accrued interest on 30 June has not been recorded.

v. Bankstown Rental Services purchased a 12-month insurance policy for $2940 on 1 November. A 24-month policy was purchased on 1 April for $6600. Both purchases were recorded by debiting Prepaid Insurance.

vi. The Supplies account had a $1500 debit balance on 1 July of the preceding year. Supplies costing $7100 were purchased during the year, and $1310 of supplies are on hand as at 30 June.

vii. On 1 June, Bankstown Rental Services received 2 months' rent in advance, totalling $4660. This was recorded by a credit to Unearned Rental Revenue.

viii. The office assistant earns $280 a day. He will be paid in July for the 5-day period ending 2 July. 188 Financial accounting

Problem (b) As you know, all adjusting entries affect one balance sheet account and one income statement account. Based on your adjusting entries prepared in requirement

i. calculate the increase or decrease in profit

ii. calculate the increase or decrease in total assets, total liabilities and total equity.