a) Prepare the necessary adjusting journal entries on June 30, 2020.
Mortgages
A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
The problem to be resolved:
Ready Hospital Supplies (RHS) trades in the buying and selling of supplies primarily targeting hospitals and private medical practitioners. During the COVID-19 pandemic, the business has experienced a rapid increase in demand and RHS is faced with the need for additional financing. You and your group members are the accounting associate supporting the credit request to Millionaire National Bank (MNB). The corporatebanking head at MNB is requesting a full set of financial statements to ensure that granting the loanwould be financially feasible during a period when many similar businesses are facing delinquency and foreclosures. Your head of finance has furnished you with the latest
Ready Hospital Supplies
Trial Balance as at June 30, 2020
|
Dr $ |
Cr $ |
Cash |
127,000 |
|
|
151,000 |
|
Allowance for Bad-Debts |
|
12,500 |
Merchandise Inventory |
187,500 |
|
Store Supplies |
58,000 |
|
Prepaid Insurance |
72,000 |
|
Prepaid Rent |
56,000 |
|
Furniture & Fixtures |
800,000 |
|
|
|
256,000 |
Computer Equipment |
450,000 |
|
Accumulated Depreciation: Computer Equipment |
|
|
Accounts Payable |
|
133,500 |
Salaries Payable |
|
|
Interest Payable |
|
27,000 |
Unearned Sales Revenue |
|
82,000 |
Long-Term Loan |
|
360,000 |
Eva Ready, Capital |
|
898,500 |
Eva Ready, Withdrawals |
104,000 |
|
Sales Revenue |
|
1,043,000 |
Sales Discount |
7,000 |
|
Sales Returns & Allowances |
5,500 |
|
Cost of Goods Sold |
403,000 |
|
Salaries Expense |
165,000 |
|
Insurance Expense |
|
|
Utilities Expense |
87,500 |
|
Rent Expense |
126,000 |
|
Depreciation Expense – Furniture & Fixtures |
|
|
Depreciation Expense – Computer Equipment |
|
|
Store Supplies Expense |
|
|
Gain on Disposal of Old Computer Equipment |
|
14,000 |
Bad-Debt Expense |
|
|
Interest Expense |
_ 27,000 |
________ |
Total |
2,826,500 |
2,826,500 |
The following additional information is available at June 30, 2020:
over 5 years on the double-declining balance method of depreciation, down to
a residue of $30,000
Allowance for
reveals that there was $186,000 worth of inventory on hand at June 30,2020
Other data:
(xi)The business is expected to make principal payments totalling $90,000 towards the
loan during the fiscal year to June 30 ,2021
Required:
[Narrations are not required]
d) A Classified balance sheet, in report format, at June 30, 2020.
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