Account help

[avin]

Hi, i have some problems with the double entry below and it may contains reversing entries on 1 July 2010.

Mary starts business on 1 July 2009. The financial year ends on 30 June 2010.



1) Mary borrow $6,000 from bank on 30 April 2010, the interest is 8% p.a. payable on 30 July 2010. Interest accrued has not been recorded.

the interest payable is= [(6,000 x 8%)/12] x 3
                               = $120

Is this correct?

2) Mary recorded unearned service revenue of $ 450 on 15 May 2010, the service was rendered on 15 June the balance adjustment has yet to be made.

I completely nit idea about the double entry.


3) On 1 December 2009, Mary paid $1,200 for a 12 month insurance policy for professional service. The payment was initially recorded as prepaid insurance.

Insurance Used = (1200/12) x 7
                     = $ 700

DR Insurance Expense   700
   CR Prepaid Insurance        700


4) Mary also paid $ 5,670 for stationary expenses during the year. At 30 June 2010, the stationary on hand is $ 670.

DR Stationary Expenses 5,670
   CR Bank                            5,670

how about the closing stock of $670?



Which of them need to do reversing entries?



Thanks a lot. Pls assist me, it urgent.
 

[avin]

Guys, this is my teacher gave us for the revision exercise for the exam!

Pls help..

[Dasith]

1) interest payable is 80 & not 120 , its payable only for 2 months.. & its not yet paid its to be paid on 30 july ,
so the 80 is accrued .

2)please provide more info on this ,otherwise i should assume that the servise was renderd anyhow within the finanacial year so sales remains unchanged.but cash increases & debtors decreases by 450 , as the unearned amount was paid in june 15.

3)i'm not exactly sure what you mean by"The payment was initially recorded as prepaid insurance." but i think it should be like this :
Total insurance expence is 1200, used for 7 monts so p/l debit : 700 & prepaid 500(1200-700)

4)     
     stationary a/c
Dr.                                     Cr.

cash 5670            Profit/loss   5000
                          Balance c/d  670

Total 5670                            5670

[avin]

thanks Dasith!!

1) is the accrue only 1 month (July) amounted $ 40? Because April paid, May paid, June paid and it is the end of the financial year.

2) What is the question means by balance day adjustment? So, Mary already recorded the Unearned but have done any to adjust the unearned?

3) The double entry you gave me is not balance.

4) my double entry is correct right? but how about the closing stock?

[Dasith]

thanks Dasith!!

1) is the accrue only 1 month (July) amounted $ 40? Because April paid, May paid, June paid and it is the end of the financial year.

2) What is the question means by balance day adjustment? So, Mary already recorded the Unearned but have done any to adjust the unearned?

3) The double entry you gave me is not balance.

4) my double entry is correct right? but how about the closing stock?

1) dude financial year ends on 30th july , so the only amount applicable for this year is 80 , the accrued part is not explained properly it dosent say for hw many months the interest is accrued , if thats so i suppose we could assume th 80 is unpaid & therefore accrued . Its better if you could post the original question.

2)i'm nt sure wat they mean by that either , could you plez post the whole question , Original one i mean, it would be much easier for me then...

3)what i gave you wasnt the double entry , but how you adjest it in P/L & balance sheet..

4)closing stock is carried down to next yer , didnt you see the "balance c/d 670" in the account ?