Clicks Pte Ltd is an e-commerce company that offers online shopping in Singapore. Following is the extract of the unadjusted trial balance of Clicks Pte Ltd as at 31 December 2021.
Account title
Debit ($)
Credit ($)
Share capital (100,000 shares at $1.00 each)
500,000
Retained earnings, 31 Dec 2020
110,000
Freehold property at cost
1,000,000
Motor Vehicle at cost
80,000
Cost of goods sold
2,254,800
Sales
3,129,200
Wages and salaries
480,000
Allowance for doubtful debts
6,000
Accounts receivable
96,800
Accounts payable
233,200
Bank
40,000
Bank Loan (for delivery van)
64,000
Inventory
88,400
Rental income
60,000
Interest expense
1,600
Additional information:
(i) The company bought a delivery van on 1 January 2021 that cost $80,000. The delivery van is expected to have a residual value of $8,000 at the end of its useful life. This purchase has been recorded in the accounts.
(ii) As the company does not occupy the entire freehold property, it rented space to two tenants at $5,000 per month each starting on 1 July 2021. The first tenant paid $15,000 for three months’ rent on 1 July 2021. However, no further payment has been made by this tenant. At the same time, on 1 July 2021, second tenant paid $45,000 for nine months’ rental. All payments received have been recorded as rental income.
(iii) On 1 January 2021, to finance the purchase of the delivery van, the company took a loan of $64,000 from the bank. The company only needs to start making the first principal repayment on 1 January 2022. The bank charged an interest of 5% per annum. Interest for the loan is payable on 1 January and 1 July. Interest for the six months had been paid on 1 July 2021. This has also been recorded in the accounts.
(iv) Wages and salaries due but still remained unpaid at 31 December 2021, $7,550
(v) The company estimated that as at 31 December 2021, 5% of accounts receivable will be uncollectible.
(vi) No depreciation has been charged for the year ended 31 December 2021. The company depreciates motor vehicle over a useful life of five years using the double declining balance method.
Required:
(a) Compute the necessary 31 December 2021 adjusting journal entries. No narrations required.