The Unadjusted Trial Balance has been prepared (provided below and also in Three
ID: 2527155 • Letter: T
Question
The Unadjusted Trial Balance has been prepared (provided below and also in ThreeBrothers worksheet.xlsx), showing only those accounts with a non-zero balance. You have gathered the following information that will be helpful in preparing any necessary adjusting entries (add any accounts necessary). Good luck!
ThreeBrothers
Unadjusted Trial Balance
Dec. 31, 2017
debit
credit
Cash
4,400,000
Accounts Receivable
22,500,000
Allowance for Bad Debts
20,000
Inventory
2,500,000
Purchases
85,832,500
Construction in Progress Inventory
36,000,000
Billings on Contract
35,000,000
PP&E
60,000,000
Accumulated Depreciation
36,000,000
Accounts Payable
18,000,000
Income Tax Payable
136,000
Common Stock
1,500,000
Retained Earnings
33,444,000
Sales Revenue
134,500,000
Sales Returns
2,017,500
NEWPROD Revenue
9,000,000
FITTRACKER Revenue
10,000,000
Cost of NEWPROD Sold
8,100,000
Cost of FITTRACKER Sold
4,500,000
General and Admin
51,750,000
TOTAL
277,600,000
277,600,000
Also, in addition to its normal operations, ThreeBrothers's management entered into a long-term agreement on September 1, 2017 to supply its internally developed smart-phone-interactive fitness equipment, FITTRACKER, and maintenance support to a regional 24-hour fitness chain. The details of the agreement call for ThreeBrothers to be paid $10,000,000 up front for the equipment and 3 years of maintenance support (beginning on agreement date). The fitness chain could have bought just the equipment for $9,000,000 with no support, and they could have independently contracted for the maintenance support for $2,000,000 for the three-year period. ThreeBrothers has arranged with a 3rd-party manufacturer to make and ship the equipment direct to customers so ThreeBrothers does not carry any FITTRACKER inventory. The cost of the equipment sold to the fitness chain was $4,500,000. ThreeBrothers has recorded the $10,000,000 as a point-of-sale transaction.
1. I need the adjusting journal entry and closing journal entry, if necessary. Thank You.
ThreeBrothers
Unadjusted Trial Balance
Dec. 31, 2017
debit
credit
Cash
4,400,000
Accounts Receivable
22,500,000
Allowance for Bad Debts
20,000
Inventory
2,500,000
Purchases
85,832,500
Construction in Progress Inventory
36,000,000
Billings on Contract
35,000,000
PP&E
60,000,000
Accumulated Depreciation
36,000,000
Accounts Payable
18,000,000
Income Tax Payable
136,000
Common Stock
1,500,000
Retained Earnings
33,444,000
Sales Revenue
134,500,000
Sales Returns
2,017,500
NEWPROD Revenue
9,000,000
FITTRACKER Revenue
10,000,000
Cost of NEWPROD Sold
8,100,000
Cost of FITTRACKER Sold
4,500,000
General and Admin
51,750,000
TOTAL
277,600,000
277,600,000
Explanation / Answer
Adjustment journal entry is as follows:
Closing Entry is as follows:
Date Particulars Dr($) Cr($) 01.09.2017 Fittracker Revenue Dr 10000000 To Cost of Fittracker sold 4500000 To Profit on sale of Fittracker 5500000 (Balancing figure) (Being sale of equipment from vendor directly to customer wrongly recorded as POS sale now adjusted)Related Questions
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