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The unadjusted trial balance that you prepared for PS Music at the end of Chapter 2 should appear as follows: The data needed to determine adjustments are as follows: During July, PS Music provided guest disc jockeys for KXMD for a total of 115 hours. For information on the amount of the accrued revenue to be billed to KXMD, see the contract described in the July 3 transaction at the end of Chapter 2. Supplies on hand at July 31, $275. The balance of the prepaid insurance account relates to the July 1 transaction at the end of Chapter 2. Depreciation of the office equipment is $50. The balance of the unearned revenue account relates to the contract between PS Music and KXMD, described in the July 3 transaction at the end of Chapter 2. Accrued wages as of July 31 were $140. Instructions 1. Prepare adjusting journal entries. You will need the following additional accounts: 2. Post the adjusting entries, inserting balances in the accounts affected. 3. Prepare an adjusted trial balance.

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Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663

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Chapter
Section
BuyFindarrow_forward

Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663
Chapter 3, Problem 1CONP
Textbook Problem
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The unadjusted trial balance that you prepared for PS Music at the end of Chapter 2 should appear as follows:

Chapter 3, Problem 1CONP, The unadjusted trial balance that you prepared for PS Music at the end of Chapter 2 should appear as , example  1

The data needed to determine adjustments are as follows:

  • During July, PS Music provided guest disc jockeys for KXMD for a total of 115 hours. For information on the amount of the accrued revenue to be billed to KXMD, see the contract described in the July 3 transaction at the end of Chapter 2.
  • Supplies on hand at July 31, $275.
  • The balance of the prepaid insurance account relates to the July 1 transaction at the end of
  • Chapter 2.
  • Depreciation of the office equipment is $50.
  • The balance of the unearned revenue account relates to the contract between PS Music and KXMD, described in the July 3 transaction at the end of Chapter 2.
  • Accrued wages as of July 31 were $140.

Instructions

  1. 1. Prepare adjusting journal entries. You will need the following additional accounts:

Chapter 3, Problem 1CONP, The unadjusted trial balance that you prepared for PS Music at the end of Chapter 2 should appear as , example  2

  1. 2. Post the adjusting entries, inserting balances in the accounts affected.
  2. 3. Prepare an adjusted trial balance.

1.

To determine

Prepare the adjusting entries in the books of Company PS at the end of the July 31, 2019.

Explanation of Solution

Adjusting entries:

Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle.  All adjusting entries affect at least one income statement account (revenue or expense), and one balance sheet account (asset or liability).

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

  • Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.
  • Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.
                                                   Journal                                           Page 18
DateDescriptionPost. RefDebit ($)Credit ($)
2019 Accounts receivable121,400 
July 31   Fees earned (1)41 1,400
  (To record the fees earned at the end of July)   
 
  31Supplies expense (2)56745 
       Supplies14 745
  (To record supplies expense incurred at the end of the July)   
 
 31Insurance expense (3)57225 
       Prepaid insurance15 225
  (To record insurance expense incurred at the end of the July)   
 
 31Depreciation expense5850 
       Accumulated depreciation-Office equipment18 50
  (To record depreciation expense incurred at the end of the July)   
 
 31Unearned revenue (4)233,600 
       Fees earned 41 3,600
  (To record the service performed to the customer at the end of the July)   
 
 31Wages expense50140 
       Wages payable22 140
  (To record wages expense incurred at the end of the July)   

Table (1)

Working notes:

1...

2.

To determine

Post the adjusting entries to the ledger in the books of Company PS.

3.

To determine

Prepare an adjusted trial balance of Company PS at July 31, 2019.

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Chapter 3 Solutions

Financial And Managerial Accounting
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