Spanners Accounting Practice

  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 2018. 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 $1,300.

Question 2

Explain why accrual accounting provides more complete information than cash basis accounting.

Question 3

Spanners Accounting Practice reported the following account balances (all these accounts have normal balances) at 30 November 2017:

Sales and Marketing expense$2,100Cash$1,100
Other assets$700Service Revenue$5,500
Depreciation expense$800Accounts Payable$500
Non-current liabilities$600Accounts Receivable$900
Capital – Spanners$3,500Drawings -Spanners$500

Required: Journalise Spanner’s closing entries, as needed for these accounts.

Question 4

Why are closing entries necessary?

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