Question

Required:

1. Open T-accounts for the listed accounts, inserting their unadjustedJune 30, 2014, balances.

2. Post the June 30, 2014, adjusting entries to the T-accounts opened.Round all amounts to the nearest whole dollar.

3. Prepare the liability section ofShell Storage Units’ balance sheet at June 30, 2014

The general ledger of Shell Storage Units at June 30, 2014, theend of the company’s fiscal year, includes the following accountbalances before adjusting entries.

Notes Payable,Short-Term $20,000

AccountsPayable $235,620

Current Portion of Long-term Debt payable

Interest Payable

Salaries payable

Employee Income Tax Payable

Employer Payroll Costs Payable

Employee Insurance Benefits Payable

Estimated Vacation Pay Liability $12,360

Sales Tax and GSTPayable $5972

Unearned RentRevenue $18,000

Long-Term DebtPayable $250,000

The additional data needed to develop the adjusting entries atJune 30 are as follows:

A) The$20,000 short-term note payable was issued on February 28. Itmatures six months from data of issuance and bears interest at6%.

B) Thelong-term debt is payable in annual installments of $50,000 withthe next installment due on August 31. On that date, Shell StorageUnits will also pay one year’s interest at 3%. Interest was lastpaid August 31 of the preceding year.

C) GrossSalaries for the last payroll of the fiscal year were $6328. Ofthis amount, employee payroll withholdings payable were $1365 andsalary payable was $4963.

D) Employer Payroll Costs Payable was $820, and Shell Storage’sliability for employee health insurance was $991.

E) ShellStorage estimates that vacation pay expense is 6% of gross salariesof $147,500 (the $147,500 includes the last payroll of the fiscalyear).

F) On March 1, the company collected one year’s rent of $18,000 inadvance.

G) At June 30,Shell Storage is the defendant in a $200,000 lawsuit, which thecompany expects to win. However, the outcome is uncertain.

Notes Payable, Short-term			Accounts Payable			Current Portion of Long- term Debt Payable

Interest Payable			Salaries Payable			Employee Income Tax Payable

Employer Payroll Costs Payable			Employee Insurance Benefits Payable			Estimated Vacation Pay Liability

Sales Tax and
GST Payable

Unearned Rent Revenue

Long-term Debt Payable

SHELL STORAGE UNITS
Balance Sheet
June 30, 2014
LIABILITIES