The December 31, 2021, unadjusted trial balance for Demon Deacons Corporation is presented below.Accounts Debit CreditCash $10,000Accounts Receivable 15,000Prepaid Rent 7,200Supplies 4,000Deferred Revenue $ 3,000Common Stock 11,000Retained Earnings 6,000Service Revenue 51,200Salaries Expense 35,000 $71,200 $71,200At year-end, the following additional information is available: 1. The balance of Prepaid Rent, $7,200, represents payment on October 31, 2021, for rent from November 1, 2021, to April 30, 2022. 2. The balance of Deferred Revenue, $3,000, represents payment in advance from a customer. By the end of the year, $750 of the services have been provided. 3. An additional $700 in salaries is owed to employees at the end of the year but will not be paid until January 4, 2022. 4. The balance of Supplies, $4,000, represents the amount of office supplies on hand at the beginning of the year of $1,700 plus an additional $2,300 purchased throughout 2021. By the end of 2021, only $800 of supplies remains. Required: 1. Update account balances for the year-end information by recording any necessary adjusting entries. No prior adjustments have been made in 2021. 2. Prepare an adjusted trial balance as of December 31, 2021.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
The December 31, 2021, unadjusted
Accounts Debit Credit
Cash $10,000
Accounts Receivable 15,000
Prepaid Rent 7,200
Supplies 4,000
Deferred Revenue $ 3,000
Common Stock 11,000
Retained Earnings 6,000
Service Revenue 51,200
Salaries Expense 35,000
$71,200 $71,200
At year-end, the following additional information is available:
1. The balance of Prepaid Rent, $7,200, represents payment on October 31, 2021, for rent from November 1, 2021, to April 30, 2022.
2. The balance of Deferred Revenue, $3,000, represents payment in advance from a customer. By the end of the year, $750 of the services have been provided.
3. An additional $700 in salaries is owed to employees at the end of the year but will not be paid until January 4, 2022.
4. The balance of Supplies, $4,000, represents the amount of office supplies on hand at the beginning of the year of $1,700 plus an additional $2,300 purchased throughout 2021. By the end of 2021, only $800 of supplies remains.
Required:
1. Update account balances for the year-end information by recording any necessary
2. Prepare an adjusted trial balance as of December 31, 2021.
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