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Your supervisor has requested your assistance with the preparation & drafting of the Financial Reports of Suntory Ltd for the period ending 30 June, 2020. The company uses periodic inventory system. All sales of goods of Suntory Ltd. are on a credit basis.

The Unadjusted Trial Balance of Suntory Ltd., as at 30 June 2020 shows the following ledger account balances:

SUNTORY LTD

Unadjusted Trial Balance

as at 30 June 2020

_________________________________________________________________

Account Debit Credit

_________________________________________________________________

Share capital $1 340 000

First Call 10 000

Retained earnings 92 000

Accounts payable 40 000

Bank overdraft (current) 220 000

Mortgage payable 400 000

Land $204 000

Buildings 800 000

Accumulated depreciation buildings 140 000

Motor Vehicles 100 000

Accounts receivable 109 900

Provision for doubtful debts 2 000

Inventory (1 July 2019) 300 000

Investments 800 000

Sales 504 000

Interest revenue 35 000

Sales returns & allowances 5 000

Purchases 261 000

Freight inwards 3 000

Salaries 93 800

Directors Fees 6 000

Commission expense 2 000

Interest expense 20 000

Delivery expense 4 000

General expenses 54 300 .

$2 773 000 $2 773 000

Your first task is to prepare General Journal entries using the template provided to record the following required adjustments at 30 June, 2020;

Suntory Ltd transactions during 2019/2020:

• Write off bad debts for the period ending 30 June, 2020 $1 925
• Record income tax expense and current tax liability of $18 000.
• Declare a final dividend, $30 000. No ratification of this dividend is needed.
• An amount of $20 000 is to be transferred to a general reserve from retained earnings. Suntory Ltds end of financial year adjustments:

• Provide for annual depreciation charges at 5% p.a. on cost of buildings for the whole year.
• Motor vehicles were purchased on March 1, 2020. Provide for the partial year depreciation charge using the following information;
  1. Cost $100 000
  2. Residual value $10 000
  3. Useful life 5 years
  4. Sum of the years digits depreciation method is to be used.

• Record the estimated Bad debts expense of 0.5% for the year ending 30 June, 2020 based on the percentage of net credit sales method. (NB; All Suntory Ltd. sales are on a credit basis)

PART A - Adjusting entries

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