Reference no: EM132974078
The records of Townsville Ltd contain the following information at 31 December, the end of the year. Ignore GST.
1. Wages earned but not paid total $2050.
2. Depreciation on the office equipment is $13 020.
3. Interest of $740 has accrued on a loan payable.
4. Services performed for clients, but not yet recorded, amount to $6528.
5. On 15 September, the company paid $2880 for a 6-month advertising campaign beginning on that date. This transaction was recorded by debiting Prepaid Advertising. At the end of the year, advertising costing $2240 had been consumed.
6. The unearned revenue account has a balance of $1605, recorded when cash was received on 1 November. It was expected the $1605 would be earned equally over November, December and January.
7. The company decided to declare a dividend of $12 000 to its shareholders on 31 December.
Required
Problem (a) Prepare adjusting entries for items 1 to 7 above.
Problem (b) Prepare reversing entries where appropriate. Where no reversing entry is required, explain why.