Elizabeth Brown started her own consulting firm, Brown Consulting, on May 1, 2022. The trial balance at May 31 is as follows. BROWN CONSULTING Trial Balance May 31, 2022 Account Number Debit Credit 101 Cash $ 4,600 112 Accounts Receivable 6,200 126 Supplies 2,100 130 Prepaid Insurance 2,400 149 Equipment 10,800 201 Accounts Payable $ 4,800 209 Unearned Service Revenue 1,900 301 Owner’s Capital 16,300 400 Service Revenue 7,900 726 Salaries and Wages Expense 3,300 729 Rent Expense 1,500 $30,900 $30,900 In addition to those accounts listed on the trial balance, the chart of accounts for Brown Consulting also contains the following accounts and account numbers: No. 150 Accumulated Depreciation—Equipment, No. 212 Salaries and Wages Payable, No. 631 Supplies Expense, No. 717 Depreciation Expense, No. 722 Insurance Expense, and No. 732 Utilities Expense. Other data: 1. $1,100 of supplies have been used during the month. 2. Utilities expense incurred but not paid on May 31, 2022, $200. 3. An insurance policy for 2 years was purchased on May 1. 4. $400 of the balance in the unearned service revenue account remains unearned at the end of the month. 5. May 31 is a Wednesday, and employees are paid on Fridays. Brown Consulting has two employees, who are paid $1,000 each for a 5-day work week. 6. The office furniture has a 5-year life with no salvage value. It is being depreciated at $180 per month for 60 months. 7. Invoices representing $1,600 of services performed during the month have not been recorded as of May 31. Enter the totals from the trial balance as beginning account balances. Post the adjusting entries to the ledger accounts. (Post entries in the order of journal entries presented in the previous part.) Cash No. 101 Date Explanation Ref. Debit Credit Balance May 31 Balance √ enter a debit amount enter a credit amount enter a balance amount Accounts Receivable No. 112 Date Explanation Ref. Debit Credit Balance May 31 Balance √ enter a debit amount enter a credit amount enter a balance amount May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount Supplies No. 126 Date Explanation Ref. Debit Credit Balance May 31 Balance √ enter a debit amount enter a credit amount enter a balance amount May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount Prepaid Insurance No. 130 Date Explanation Ref. Debit Credit Balance May 31 Balance √ enter a debit amount enter a credit amount enter a balance amount May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount Equipment No. 149 Date Explanation Ref. Debit Credit Balance May 31 Balance √ enter a debit amount enter a credit amount enter a balance amount Accumulated Depreciation—Equipment No. 150 Date Explanation Ref. Debit Credit Balance May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount Accounts Payable No. 201 Date Explanation Ref. Debit Credit Balance May 31 Balance √ enter a debit amount enter a credit amount enter a balance amount May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount Unearned Service Revenue No. 209 Date Explanation Ref. Debit Credit Balance May 31 Balance √ enter a debit amount enter a credit amount enter a balance amount May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount Salaries and Wages Payable No. 212 Date Explanation Ref. Debit Credit Balance May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount Owner’s Capital No. 301 Date Explanation Ref. Debit Credit Balance May 31 Balance √ enter a debit amount enter a credit amount enter a balance amount Service Revenue No. 400 Date Explanation Ref. Debit Credit Balance May 31 Balance √ enter a debit amount enter a credit amount enter a balance amount May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount Supplies Expense No. 631 Date Explanation Ref. Debit Credit Balance May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount Depreciation Expense No. 717 Date Explanation Ref. Debit Credit Balance May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount Insurance Expense No. 722 Date Explanation Ref. Debit Credit Balance May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount Salaries and Wages Expense No. 726 Date Explanation Ref. Debit Credit Balance May 31 Balance √ enter a debit amount enter a credit amount enter a balance amount May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount Rent Expense No. 729 Date Explanation Ref. Debit Credit Balance May 31 Balance √ enter a debit amount enter a credit amount enter a balance amount Utilities Expense No. 732 Date Explanation Ref. Debit Credit Balance May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount
Elizabeth Brown started her own consulting firm, Brown Consulting, on May 1, 2022. The trial balance at May 31 is as follows. BROWN CONSULTING Trial Balance May 31, 2022 Account Number Debit Credit 101 Cash $ 4,600 112 Accounts Receivable 6,200 126 Supplies 2,100 130 Prepaid Insurance 2,400 149 Equipment 10,800 201 Accounts Payable $ 4,800 209 Unearned Service Revenue 1,900 301 Owner’s Capital 16,300 400 Service Revenue 7,900 726 Salaries and Wages Expense 3,300 729 Rent Expense 1,500 $30,900 $30,900 In addition to those accounts listed on the trial balance, the chart of accounts for Brown Consulting also contains the following accounts and account numbers: No. 150 Accumulated Depreciation—Equipment, No. 212 Salaries and Wages Payable, No. 631 Supplies Expense, No. 717 Depreciation Expense, No. 722 Insurance Expense, and No. 732 Utilities Expense. Other data: 1. $1,100 of supplies have been used during the month. 2. Utilities expense incurred but not paid on May 31, 2022, $200. 3. An insurance policy for 2 years was purchased on May 1. 4. $400 of the balance in the unearned service revenue account remains unearned at the end of the month. 5. May 31 is a Wednesday, and employees are paid on Fridays. Brown Consulting has two employees, who are paid $1,000 each for a 5-day work week. 6. The office furniture has a 5-year life with no salvage value. It is being depreciated at $180 per month for 60 months. 7. Invoices representing $1,600 of services performed during the month have not been recorded as of May 31. Enter the totals from the trial balance as beginning account balances. Post the adjusting entries to the ledger accounts. (Post entries in the order of journal entries presented in the previous part.) Cash No. 101 Date Explanation Ref. Debit Credit Balance May 31 Balance √ enter a debit amount enter a credit amount enter a balance amount Accounts Receivable No. 112 Date Explanation Ref. Debit Credit Balance May 31 Balance √ enter a debit amount enter a credit amount enter a balance amount May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount Supplies No. 126 Date Explanation Ref. Debit Credit Balance May 31 Balance √ enter a debit amount enter a credit amount enter a balance amount May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount Prepaid Insurance No. 130 Date Explanation Ref. Debit Credit Balance May 31 Balance √ enter a debit amount enter a credit amount enter a balance amount May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount Equipment No. 149 Date Explanation Ref. Debit Credit Balance May 31 Balance √ enter a debit amount enter a credit amount enter a balance amount Accumulated Depreciation—Equipment No. 150 Date Explanation Ref. Debit Credit Balance May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount Accounts Payable No. 201 Date Explanation Ref. Debit Credit Balance May 31 Balance √ enter a debit amount enter a credit amount enter a balance amount May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount Unearned Service Revenue No. 209 Date Explanation Ref. Debit Credit Balance May 31 Balance √ enter a debit amount enter a credit amount enter a balance amount May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount Salaries and Wages Payable No. 212 Date Explanation Ref. Debit Credit Balance May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount Owner’s Capital No. 301 Date Explanation Ref. Debit Credit Balance May 31 Balance √ enter a debit amount enter a credit amount enter a balance amount Service Revenue No. 400 Date Explanation Ref. Debit Credit Balance May 31 Balance √ enter a debit amount enter a credit amount enter a balance amount May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount Supplies Expense No. 631 Date Explanation Ref. Debit Credit Balance May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount Depreciation Expense No. 717 Date Explanation Ref. Debit Credit Balance May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount Insurance Expense No. 722 Date Explanation Ref. Debit Credit Balance May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount Salaries and Wages Expense No. 726 Date Explanation Ref. Debit Credit Balance May 31 Balance √ enter a debit amount enter a credit amount enter a balance amount May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount Rent Expense No. 729 Date Explanation Ref. Debit Credit Balance May 31 Balance √ enter a debit amount enter a credit amount enter a balance amount Utilities Expense No. 732 Date Explanation Ref. Debit Credit Balance May 31 Adjusting J4 enter a debit amount enter a credit amount enter a balance amount
Financial & Managerial Accounting
13th Edition
ISBN:9781285866307
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter3: The Adjusting Process
Section: Chapter Questions
Problem 1COP: The unadjusted trial balance that you prepared for PS Music at the end of Chapter 2 should appear as...
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Concept explainers
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Question
Elizabeth Brown started her own consulting firm, Brown Consulting, on May 1, 2022. The
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BROWN CONSULTING
Trial Balance May 31, 2022 |
||||||
|---|---|---|---|---|---|---|
|
Account Number
|
Debit
|
Credit
|
||||
|
101
|
Cash
|
$ 4,600 | ||||
|
112
|
Accounts Receivable
|
6,200 | ||||
|
126
|
Supplies
|
2,100 | ||||
|
130
|
Prepaid Insurance
|
2,400 | ||||
|
149
|
Equipment
|
10,800 | ||||
|
201
|
Accounts Payable
|
$ 4,800 | ||||
|
209
|
Unearned Service Revenue
|
1,900 | ||||
|
301
|
Owner’s Capital
|
16,300 | ||||
|
400
|
Service Revenue
|
7,900 | ||||
|
726
|
Salaries and Wages Expense
|
3,300 | ||||
|
729
|
Rent Expense
|
1,500 | ||||
| $30,900 | $30,900 |
In addition to those accounts listed on the trial balance, the chart of accounts for Brown Consulting also contains the following accounts and account numbers: No. 150
Other data:
| 1. | $1,100 of supplies have been used during the month. | |
| 2. | Utilities expense incurred but not paid on May 31, 2022, $200. | |
| 3. | An insurance policy for 2 years was purchased on May 1. | |
| 4. | $400 of the balance in the unearned service revenue account remains unearned at the end of the month. | |
| 5. | May 31 is a Wednesday, and employees are paid on Fridays. Brown Consulting has two employees, who are paid $1,000 each for a 5-day work week. | |
| 6. | The office furniture has a 5-year life with no salvage value. It is being |
|
| 7. | Invoices representing $1,600 of services performed during the month have not been recorded as of May 31. |
Enter the totals from the trial balance as beginning account balances. Post the
|
Cash
|
No. 101
|
||||
|---|---|---|---|---|---|
|
Date
|
Explanation
|
Ref.
|
Debit
|
Credit
|
Balance
|
|
May 31
|
Balance
|
√
|
enter a debit amount
|
enter a credit amount
|
enter a balance amount
|
|
Accounts Receivable
|
No. 112
|
||||
|
Date
|
Explanation
|
Ref.
|
Debit
|
Credit
|
Balance
|
|
May 31
|
Balance
|
√
|
enter a debit amount
|
enter a credit amount
|
enter a balance amount
|
|
May 31
|
Adjusting
|
J4
|
enter a debit amount
|
enter a credit amount
|
enter a balance amount
|
|
Supplies
|
No. 126
|
||||
|
Date
|
Explanation
|
Ref.
|
Debit
|
Credit
|
Balance
|
|
May 31
|
Balance
|
√
|
enter a debit amount
|
enter a credit amount
|
enter a balance amount
|
|
May 31
|
Adjusting
|
J4
|
enter a debit amount
|
enter a credit amount
|
enter a balance amount
|
|
Prepaid Insurance
|
No. 130
|
||||
|
Date
|
Explanation
|
Ref.
|
Debit
|
Credit
|
Balance
|
|
May 31
|
Balance
|
√
|
enter a debit amount
|
enter a credit amount
|
enter a balance amount
|
|
May 31
|
Adjusting
|
J4
|
enter a debit amount
|
enter a credit amount
|
enter a balance amount
|
|
Equipment
|
No. 149
|
||||
|
Date
|
Explanation
|
Ref.
|
Debit
|
Credit
|
Balance
|
|
May 31
|
Balance
|
√
|
enter a debit amount
|
enter a credit amount
|
enter a balance amount
|
|
Accumulated Depreciation—Equipment
|
No. 150
|
||||
|
Date
|
Explanation
|
Ref.
|
Debit
|
Credit
|
Balance
|
|
May 31
|
Adjusting
|
J4
|
enter a debit amount
|
enter a credit amount
|
enter a balance amount
|
|
Accounts Payable
|
No. 201
|
||||
|
Date
|
Explanation
|
Ref.
|
Debit
|
Credit
|
Balance
|
|
May 31
|
Balance
|
√
|
enter a debit amount
|
enter a credit amount
|
enter a balance amount
|
|
May 31
|
Adjusting
|
J4
|
enter a debit amount
|
enter a credit amount
|
enter a balance amount
|
|
Unearned Service Revenue
|
No. 209
|
||||
|
Date
|
Explanation
|
Ref.
|
Debit
|
Credit
|
Balance
|
|
May 31
|
Balance
|
√
|
enter a debit amount
|
enter a credit amount
|
enter a balance amount
|
|
May 31
|
Adjusting
|
J4
|
enter a debit amount
|
enter a credit amount
|
enter a balance amount
|
|
Salaries and Wages Payable
|
No. 212
|
||||
|
Date
|
Explanation
|
Ref.
|
Debit
|
Credit
|
Balance
|
|
May 31
|
Adjusting
|
J4
|
enter a debit amount
|
enter a credit amount
|
enter a balance amount
|
|
Owner’s Capital
|
No. 301
|
||||
|
Date
|
Explanation
|
Ref.
|
Debit
|
Credit
|
Balance
|
|
May 31
|
Balance
|
√
|
enter a debit amount
|
enter a credit amount
|
enter a balance amount
|
|
Service Revenue
|
No. 400
|
||||
|
Date
|
Explanation
|
Ref.
|
Debit
|
Credit
|
Balance
|
|
May 31
|
Balance
|
√
|
enter a debit amount
|
enter a credit amount
|
enter a balance amount
|
|
May 31
|
Adjusting
|
J4
|
enter a debit amount
|
enter a credit amount
|
enter a balance amount
|
|
May 31
|
Adjusting
|
J4
|
enter a debit amount
|
enter a credit amount
|
enter a balance amount
|
|
Supplies Expense
|
No. 631
|
||||
|
Date
|
Explanation
|
Ref.
|
Debit
|
Credit
|
Balance
|
|
May 31
|
Adjusting
|
J4
|
enter a debit amount
|
enter a credit amount
|
enter a balance amount
|
|
Depreciation Expense
|
No. 717
|
||||
|
Date
|
Explanation
|
Ref.
|
Debit
|
Credit
|
Balance
|
|
May 31
|
Adjusting
|
J4
|
enter a debit amount
|
enter a credit amount
|
enter a balance amount
|
|
Insurance Expense
|
No. 722
|
||||
|
Date
|
Explanation
|
Ref.
|
Debit
|
Credit
|
Balance
|
|
May 31
|
Adjusting
|
J4
|
enter a debit amount
|
enter a credit amount
|
enter a balance amount
|
|
Salaries and Wages Expense
|
No. 726
|
||||
|
Date
|
Explanation
|
Ref.
|
Debit
|
Credit
|
Balance
|
|
May 31
|
Balance
|
√
|
enter a debit amount
|
enter a credit amount
|
enter a balance amount
|
|
May 31
|
Adjusting
|
J4
|
enter a debit amount
|
enter a credit amount
|
enter a balance amount
|
|
Rent Expense
|
No. 729
|
||||
|
Date
|
Explanation
|
Ref.
|
Debit
|
Credit
|
Balance
|
|
May 31
|
Balance
|
√
|
enter a debit amount
|
enter a credit amount
|
enter a balance amount
|
|
Utilities Expense
|
No. 732
|
||||
|
Date
|
Explanation
|
Ref.
|
Debit
|
Credit
|
Balance
|
|
May 31
|
Adjusting
|
J4
|
enter a debit amount
|
enter a credit amount
|
enter a balance amount
|
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