Chapter 3, Problem 16E

Preparing unadjusted and adjusted trial balances, including the adjustments $\text{P}10$
The following data are taken from the unadjusted trial balance of the Westcott Company at December 31. Each account carries a normal balance. Set up a 10-column work sheet to answer the requirements.

1. Enter the accounts in proper order and enter their balances in the correct Debit or Credit column of the Unadjusted Trial Balance columns of the 10-column work sheet.
2. Use the following adjustment information to complete the Adjustments columns of the work sheet from part 1.
1. Depreciation on equipment, $3
2. Accrued salaries, $6
3. The $12 of unearned revenue has been earned
4. Supplies available at December 31, $15
5. Expired insurance, $15
3. Extend the balances in the Adjusted Trial Balance columns of the work sheet to the proper financial statement columns. Compute totals for those columns, including net income.

To determine

Ten Column Work Sheet:

A ten-column worksheet has five main column headings with two subheadings for debit and credit for each of those five main headings. These main headings are Unadjusted trial balance, Adjustments, Adjusted trial balance, Income statement and Balance sheet.

The complete set of financial statements can be prepared with the help of ten column worksheet.

To Prepare:

Unadjusted trial balance after determining the accounts in their proper order and entering the balances in the respective debit or credit column based onthe nature of accounts.

Explanation of Solution

	Unadjusted Trial Balance		Adjustments		Adjusted Trial Balance		Income Statement		Balance Sheet
Account Titles	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit
Cash	$21
Accounts Receivable	$12
Supplies	$24
Prepaid Insurance	$18
Equipment	$39
Accumulated Depreciation-Equipment		$15
Accounts Payable		$6
Accrued Salaries		$0
Unearned Revenue		$12
Common Stock		$10
Retained Earnings		$32
Revenue		$75
Dividends	$6
Depreciation Expense	$0
Supplies Expense	$0
Insurance Expense	$0
Salaries Expense	$18
Utilities Expense	$12
Total	$150	$150	$0	$0	$0	$0	$0	$0	$0	$0
Net Income							$0			$0
							$0	$0	$0	$0

To determine

Adjusting entries are passed at the end of the accounting period to determine the correct amount of revenues and expenses so that the net result can be computed therefrom.

To Complete:

Adjustment columns of the ten-column worksheet by using the adjustment entries for a through e.

Explanation of Solution

	Unadjusted Trial Balance		Adjustments		Adjusted Trial Balance		Income Statement		Balance Sheet
Account Titles	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit
Cash	$21
Accounts Receivable	$12
Supplies	$24			$9
Prepaid Insurance	$18			$15
Equipment	$39
Accumulated Depreciation-Equipment		$15		$3
Accounts Payable		$6
Accrued Salaries		$0		$6
Unearned Revenue		$12	$12
Common Stock		$10
Retained Earnings		$32
Revenue		$75		$12
Dividends	$6
Depreciation Expense	$0		$3
Supplies Expense	$0		$9
Insurance Expense	$0		$15
Salaries Expense	$18		$6
Utilities Expense	$12
Total	$150	$150	$45	$45	$0	$0	$0	$0	$0	$0
Net Income							$0			$0
							$0	$0	$0	$0

To determine

Adjusted trial balance is prepared after incorporating the adjusting entries to the concerned account balances.

To Complete:

The adjusted trial balances after incorporating adjusting entries, then totaling all the columns and determination of net income.

Explanation of Solution

	Unadjusted Trial Balance		Adjustments		Adjusted Trial Balance		Income Statement		Balance Sheet
Account Titles	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit
Cash	$21				$21				$21
Accounts Receivable	$12				$12				$12
Supplies	$24			$9	$15				$15
Prepaid Insurance	$18			$15	$3				$3
Equipment	$39				$39				$39
Accumulated Depreciation-Equipment		$15		$3		$18				$18
Accounts Payable		$6				$6				$6
Accrued Salaries				$6		$6				$6
Unearned Revenue		$12	$12			$0				$0
Common Stock		$10				$10				$10
Retained Earnings		$32				$32				$32
Revenue		$75		$12		$87		$87
Dividends	$6				$6
Depreciation Expense			$3		$3		$3
Supplies Expense			$9		$9		$9
Insurance Expense			$15		$15		$15
Salaries Expense	$18		$6		$24		$24
Utilities Expense	$12				$12		$12
Total	$150	$150	$45	$45	$159	$159	$63	$87	$90	$72
Net Income							$24			$24
Dividends										$(6)
							$87	$87	$90	$90