Assessable Practical Work and Reflection Assignment 2022

7111AFE Topic 2 Assessable Homework
7111AFE Accounting
Assessable Practical Work and Reflection
Topic 2 – The Adjusting Process
Due: Thursday 1 August, 2019 at 10am
Please show all workings and answer the following questions in your own words.
Question 1
Journalise any necessary adjusting entries for ABC Accounting in the General Journal at 30th
June 2015. Explanations/Narrations are NOT required.
1. On the first of April paid rent in advance for 12 months, $15,000.
2. Received $4,000 Fees in Advance on 1st March 2015. At the 30th 25% of the work has been
completed.
3. Employee Salaries owed for Monday to Wednesday of a five-day working week; the weekly
payroll is $12,500.
4. Depreciation for one month on Office Equipment costing $5,000 with a salvage value of zero
and a useful life of 10 years.
5. Interest expense accrued $1,200.
Journal
DATE ACCOUNTS AND EXPLANATIONS POST.REF. DEBIT CREDIT
Prepaid rent Dr. 15000
To rent expenses 15000
1st
march
Cash a/c Dr. 4000
To accrued income 4000
Payroll A/c Dr. 12500
To outstanding a/c 12500
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7111AFE Topic 2 Assessable Homework
Depreciation A/c Dr. 42
To accumulated depreciation 42
Accumulated depreciation Dr. 42
To fixed assets 42
Interest Expenses Dr. 1200
To interest expenses payable 1200
Question 2
Assume that Surfers Ltd.’s accountant neglected to record the payroll expense accrual
adjustment at the end of October.
a. Explain the effect of this omission on the net profit for October.
In the entire world the concept of the accounting that has been followed is the one which is
bifurcated into the accrual concept, the mercantile concept, the cash basis of the accounting
lastly the hybrid basis. If the net profit of the October is omitted the real value of the profit
would be overstated. Hence, the surfer’s limited when neglected to record the expenses of
the payroll the profits of the month of the October will be over sated and the Surfer’s limited
will be understated (Linarello, Petrella & Sette, 2019).
b. Explain the effect of this omission on the net profit for November.
The error of the omission is of two types namely, partial omission or complete omission. In
case of the partial transaction, the transactions are recorded in the books, but not posted in
the ledger. In case of the complete omission the transactions are not recorded at all. They are
completely omitted from the books. The net income for the November would be
understated. The net profit adjustment for the omission of the month of the November will
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