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The unadjusted trial balance that you prepared for PS Music at the end of Chapter 2 should appear as follows: PS Music Unadjusted Trial Balance July 31, 2018 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: 18 Accumulated Depreciation—Office Equipment 22 Wages Payable 57 Insurance Expense 58 Depreciation Expense 2. Post the adjusting entries, inserting balances in the accounts affected. 3. Prepare an adjusted trial balance.

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Financial & Managerial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337119207

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Section
BuyFindarrow_forward

Financial & Managerial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337119207
Chapter 3, Problem 1COP
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:

PS Music

Unadjusted Trial Balance

July 31, 2018

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

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:

    18 Accumulated Depreciation—Office Equipment

    22 Wages Payable

    57 Insurance Expense

    58 Depreciation Expense

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

1.

To determine

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.

T-account:

T-account refers to an individual account, where the increases or decreases in the value of specific asset, liability, stockholder’s equity, revenue, and expenditure items are recorded.

This account is referred to as the T-account, because the alignment of the components of the account resembles the capital letter ‘T’.’ An account consists of the three main components which are as follows:

  1. (a) The title of the account
  2. (b) The left or debit side
  3. (c) The right or credit side

Adjusted trial balance:

Adjusted trial balance is a summary of all the ledger accounts, and it contains the balances of all the accounts after the adjustment entries are journalized, and posted.

To prepare: The adjusting entries in the books of Company PS at the end of the July 31, 2019.

Explanation of Solution

                                                   Journal                                           Page 18
Date Description Post. Ref Debit ($) Credit ($)
2019   Accounts receivable 12 1,400  
July  31    Fees earned (1) 41   1,400
    (To record the fees earned at the end of July)      
 
   31 Supplies expense (2) 56 745  
         Supplies 14   745
    (To record supplies expense incurred at the end of the July)      
 
  31 Insurance expense (3) 57 225  
         Prepaid insurance 15   225
    (To record insurance expense incurred at the end of the July)      
 
  31 Depreciation expense 58 50  
         Accumulated depreciation-Office equipment 18   50
    (To record depreciation expense incurred at the end of the July)      
 
  31 Unearned revenue (4) 23 3,600  
         Fees earned 41   3,600
    (To record the service performed to the customer at the end of the July)      
 
  31 Wages expense 50 140  
         Wages payable 22   140
    (To record wages expense incurred at the end of the July)      

Table (1)

Working notes:

1...

2.

To determine

To post: The adjusting entries to the ledger in the books of Company PS.

3.

To determine

To prepare: An adjusted trial balance of Company PS at July 31, 2019.

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Chapter 3 Solutions

Financial & Managerial Accounting
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