Question

Need Answer for (c) only The trial balance of Chi Corporation is reproduced below. The following...

Need Answer for (c) only

The trial balance of Chi Corporation is reproduced below. The following information below is relevant to the preparation of adjusting entries needed to both properly match revenues and expenses for the period and reflect the proper balances in the real and nominal accounts.

(a) Chi determined that one percent of sales will become uncollectible (see the trial balance for total sales revenue of the year).

(b)   Depreciation is computed using the straight-line method, with a ten-year life and $5,000 salvage value.

(c)   Salesmen are paid commissions of 15% of sales. Commissions on sales for December have not been paid.

(d)   The note was issued on October 1, bearing interest at 8%, due Feb. 1, 2021.

(e)   A physical inventory of supplies indicated $440 of supplies currently in stock.

(f)    On December 1, 2020 Chi paid $3,000 for a 6-month fire insurance policy. Coverage began on December 1 through May 31, 2021.

(g) The salaries of employees from December 28 to December 31 is $5,000. This salary will be paid on January 8, 2021. The firm usually uses Salary Payable account to accrue salary.

Chi Corporation

Work Sheet

For the Year Ended December 31, 2020

                                                                         Trial Balance                                                                 

Accounts                                                   Dr. Cr.               

Cash 12,400

Equity Invest. 14,050

Accounts Rec. 30,000

Allowance for Doutful Accounts                                                   420

Inventory 13,800

Supplies 1,040

Prepaid insurance 3,000

Equipment 65,000

Accum. Depreciation-Equip. 9,500

Accounts Payable 4,400

Notes Payable 10,000

Common Stock 40,000

Ret. Earnings 29,690

Sales Revenue 360,000

Cost of Goods Sold 245,520

Salaries and Wages Expense 20,800

Sales Commission Expense 39,000

Rent Expense 7,200

Misc. Expense                                2,200                                          

     Totals   454,010                           454,010

Business   Accounting   
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Homework Answers

Answer #1
General Journal Debit Credit
Sales Commission Expense           15,000
Sales Commissions Payable            15,000
15% of sales is (15% × $360,000), which is $54,000
The balance in the Sales Commissions Expense account is $39,000
before adjustment, indicating that $15,000 of commissions are accrued but unpaid.
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