Record the ADJUSTING ENTRIES Outstanding debt is 120000 Mach

ns. No. Date Transaction Description | | 1/1/2018| Company Borrows $500,000 at 10% for 4 years specifically for the construction of a building 2 2/1/2018 Company purchases 75 bags of fertilizer from Plant Life in cash 3 2/2/2018 Company spends $120,000 towards the construction of the building 4 3/1/2018$ Company purchases a machine listed at $100,000. Shipping costs for the machine are $2,500, setup costs are 9,000, and general maintenance costs are $A,000. Salvage value of the machine is $5,000. 5 5/1/2018 Company sells 5 weedeaters and 200 bags of mulch to Andres Mossiman on credit 6 6/10/2018 Company pays off its account in full with Garden Supply 7 6/30/2018 Company spends $100,000 in costs towards the construction of the building 7/22/2018 Company returns a defective 1ooft waterhose to Fastenal. Fastenal credits company\'s account for the returned 9 9/1/2018 Company Spends $125,000 towards the construction of the building 10 9/15/2018 Comp 11 10/2/2018 Kyle Riesedge pays $A,000 on his account with Company hose Company contracts to buy all of its lawnmowers from John Deere in exchange for future discounts on lawnmower purchases. The present value of these discounts are valued at $20,000 12 11/1/2018 Company spends $78,000 towards the construction of the building 13 11/16/2018 Company sells 4 wheelbarrows and 100 ounces of plant seeds to Oliver Kahn 14 12/17/2018 Peter Wallace returns 3 defective lawnmowers

Solution

15. Interest A/c........................Dr 59600

To Interest payable A/c(120000*8%+500000*10%) 59600

(Being interest expense accrued for the year)

Fixed Asset A/c .....................Dr 50000

To Interest A/c............................50000

(Being interest capitalised on fixed assets upto the amount of specific borrowing)

16 Calculation of depreciation

For existing Equipment (635000-10000)/4 =156250

For new equipment (115000-5000)/3 = 36667

Total =192917

Depreciation A/c..............Dr 192917

To Equipment A/c..........................192917

(Being Depreciation charged)

Profit and loss A/c..............Dr 192917

To Depreciation A/c.......................192917

(Being transeferred to P&L)

17. Salaries and wages A/c............................Dr 3000

To salaries and wages payable.........................3000

( Being salaries payable for the month of december)

18. Bad debts A/c...............................Dr 20000

To Profit and loss A/c......................... 20000