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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

Adjusting Entries

Two months (July and August) have passed since Ms. Valli has seen the financial statements for All About You Spa. It is time to begin their preparation. Several accounts need adjusting. These include the accounts you adjusted in Chapter 4 as well as any accounts involved with merchandising.

Adjusting Entry Information

Merchandise Inventory Adjustment (a)

A physical count of inventory was taken, and the inventory was valued at $11,310.

Supplies Adjustments (b) and (c)

A physical count has been taken of the two supplies accounts. The values of the remaining inventories of supplies are as follows:

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Prepaid Insurance Adjustment (d)

A review of the insurance records determined that $233.34 in liability insurance coverage had been used during the last two months.

Depreciation Adjustments (e) and (f)

Estimated depreciation amounts for the two equipment accounts are as follows:

images

Wages Expense/Wages Payable Adjustment

There is no need for a Wages Expense/Wages Payable adjustment because the end of the fiscal period did not come in the middle of a pay period.

Required

  1. 1. Complete a work sheet (if required by your instructor). Ignore this step if using CLGL.
  2. 2. Journalize the adjusting entries in the general journal.
    • If you are preparing the adjusting entries with Working Papers, enter your transactions beginning on page 16.
  3. 3. Post the adjusting entries to the general ledger accounts.
    • Ignore this step if you are using CLGL.
  4. 4. Prepare an adjusted trial balance as of August 31, 20--.

1.

To determine

Prepare worksheet for A Spa as of August.

Explanation

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

Balance sheet: This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders’ equity) over those resources. The resources of the company are assets which include money contributed by stockholders and creditors. Hence, the main elements of the balance sheet are assets, liabilities, and stockholders’ equity...

2.

To determine

Journalize the adjusting entries in the general journal

3.

To determine

Post the adjusting entries in general ledger.

4.

To determine

Prepare a trail balance for 31st August.

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