Reference no: EM133172978
Question - The following is MontRoyal City Tour limited's unadjusted trial balance at its year end, November 30, 2021. The company adjust its accounts annually (no accruals recorded during the year).
|
Debit
|
Credit
|
|
Cash
|
15,800
|
|
|
Accounts receivable
|
7,640
|
|
|
Allowance for doubtful accounts
|
|
800
|
|
Supplies
|
965
|
|
|
Prepaid rent
|
2,400
|
|
|
Prepaid insurance
|
7,320
|
|
|
Equipment
|
13,440
|
|
|
Accumulated depreciation - equipment
|
|
3,360
|
|
Vehicles
|
140,400
|
|
|
Accumulated depreciation - vehicles
|
|
46,800
|
|
Patent
|
10,000
|
|
|
Accounts payable
|
|
1,925
|
|
Deferred revenue
|
|
14,000
|
|
Note payable, due 2024
|
|
54,000
|
|
Common shares
|
|
10,000
|
|
Retained earnings
|
|
27,225
|
|
Service revenue
|
|
140,575
|
|
Salaries expense
|
69,560
|
|
|
Bad debt expense
|
600
|
|
|
Repairs and maintenance expense
|
11,170
|
|
|
Rent expense
|
13,200
|
|
|
Interest expense
|
3,465
|
|
|
Advertising expense
|
1,025
|
|
|
Income tax expense
|
1,700
|
|
|
$298,685
|
$298,685
|
Additional information:
1. The insurance policy has a one-year term beginning April 1, 2021. At that time, a premium of $7,320 was paid.
2. The equipment was acquired on December 1, 2018. At that time, the estimated useful life was of 8 years with a nul ($0) residual value. The company uses straight-line depreciation. Due to an increased strained on the equipment, the company is now deciding to use the equipment a total of only 6 years but expect a residual value of $1,000.
3. The vehicles were acquired on December 1, 2018, and have an estimated useful life of six years with no residual value. The company uses straight-line depreciation for the vehicles.
4. A patent was taken on June 1, 2021. Its estimated useful life is 4 years.
5. A physical count shows $300 of supplies on hand at November 30.
6. The note payable was contracted on April 1, 2021, and has a 7% interest rate. Interests and capital are due at maturity (March 31, 2024).
7. Deposits of $7,000 were received for 5 advance tour reservations from a school. At November 30, 3 of the tour had been performed.
8. Employees are owed a total of $500 at November 30.
9. A senior citizens' club that had not made an advance deposit took a tour for $1,250. This group was not yet billed for the service performed.
10. On November 1, the company paid $2,400 rent in advance for the months of November and December.
11. The company estimates that 2% of its accounts receivable are uncollectable.
Required - Preparing the adjustment entries required at November 30, 2021.