Concept explainers
The unadjusted
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 $140.
Instructions
- 1. Prepare adjusting
journal entries. You will need the following additional accounts:18 Accumulated Depreciation—Office Equipment
22 Wages Payable
57 Insurance Expense
58 Depreciation Expense
- 2.
Post the adjusting entries , inserting balances in the accounts affected. - 3. Prepare an adjusted trial balance.
1.
Adjusting entries:
Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle. All adjusting entries affect at least one income statement account (revenue or expense), and one balance sheet account (asset or liability).
Rules of Debit and Credit:
Following rules are followed for debiting and crediting different accounts while they occur in business transactions:
- Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.
- Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.
T-account:
T-account refers to an individual account, where the increases or decreases in the value of specific asset, liability, stockholder’s equity, revenue, and expenditure items are recorded.
This account is referred to as the T-account, because the alignment of the components of the account resembles the capital letter ‘T’.’ An account consists of the three main components which are as follows:
- (a) The title of the account
- (b) The left or debit side
- (c) The right or credit side
Adjusted trial balance:
Adjusted trial balance is a summary of all the ledger accounts, and it contains the balances of all the accounts after the adjustment entries are journalized, and posted.
To prepare: The adjusting entries in the books of Company PS at the end of the July 31, 2019.
Explanation of Solution
Journal Page 18 | |||||
Date | Description | Post. Ref | Debit ($) | 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. Calculated the value of accrued fees during the July
Hence, fees earned during the July are $1,400.
2. Calculate the value of supplies expense
Hence, supplies expense during the July is $745.
3. Calculate the value of insurance expense
Hence, insurance expense during the July is $745.
4. Calculate the value of unearned fees at the end of the July
Hence, unearned fees at the end of the July are $3,600.
2.
To post: The adjusting entries to the ledger in the books of Company PS.
Explanation of Solution
Post the adjusting entries to the ledger account as follows:
Account: Cash Account no. 11 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2019 | |||||||
July | 1 | Balance | ✓ | 3,920 | |||
1 | 1 | 5,000 | 8,920 | ||||
1 | 1 | 1,750 | 7,170 | ||||
1 | 1 | 2,700 | 4,470 | ||||
2 | 1 | 1,000 | 5,470 | ||||
3 | 1 | 7,200 | 12,670 | ||||
3 | 1 | 250 | 12,420 | ||||
4 | 1 | 900 | 11,520 | ||||
8 | 1 | 200 | 11,320 | ||||
11 | 1 | 1,000 | 12,320 | ||||
13 | 1 | 700 | 11,620 | ||||
14 | 1 | 1,200 | 10,420 | ||||
16 | 2 | 2,000 | 12,420 | ||||
21 | 2 | 620 | 11,800 | ||||
22 | 2 | 800 | 11,000 | ||||
23 | 2 | 750 | 11,750 | ||||
27 | 2 | 915 | 10,835 | ||||
28 | 2 | 1,200 | 9,635 | ||||
29 | 2 | 540 | 9,095 | ||||
30 | 2 | 500 | 9,595 | ||||
31 | 2 | 3,000 | 12,595 | ||||
31 | 2 | 1,400 | 11,195 | ||||
31 | 2 | 1,250 | 9,945 |
Table (2)
Account: Accounts Receivable Account no. 12 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2019 | |||||||
July | 1 | Balance | ✓ | 1,000 | |||
2 | 1 | 1,000 | |||||
23 | 2 | 1,750 | 1,750 | ||||
30 | 2 | 1,000 | 2,750 | ||||
31 | Adjusting | 3 | 1,400 | 4,150 |
Table (3)
Account: Supplies Account no. 14 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2019 | |||||||
July | 1 | Balance | ✓ | 170 | |||
18 | 850 | 1,020 | |||||
31 | Adjusting | 745 | 275 |
Table (4)
Account: Prepaid Insurance Account no. 15 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2019 | |||||||
July | 1 | 1 | 2,700 | 2,700 | |||
31 | Adjusting | 3 | 225 | 2,475 |
Table (5)
Account: Office equipment Account no. 17 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2019 | |||||||
July | 5 | 1 | 7,500 | 7,500 |
Table (6)
Account: Accumulated Depreciation Account no. 18 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2019 | |||||||
July | 31 | Adjusting | 3 | 50 | 50 |
Table (7)
Account: Accounts Payable Account no. 21 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2019 | |||||||
July | 1 | Balance | ✓ | 250 | |||
3 | 1 | 250 | |||||
5 | 1 | 7,500 | 7,500 | ||||
18 | 2 | 850 | 8,350 |
Table (8)
Account: Wages Payable Account no. 22 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2019 | |||||||
July | 31 | Adjusting | 3 | 140 | 140 |
Table (9)
Account: Unearned revenue Account no. 23 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2019 | |||||||
July | 1 | 1 | 7,200 | 7,200 | |||
31 | Adjusting | 3 | 3,600 | 3,600 |
Table (10)
Account: P’s capital Account no. 31 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2019 | |||||||
July | 1 | Balance | ✓ | 4,000 | |||
1 | 1 | 5,000 | 9,000 |
Table (11)
Account: P’s drawings Account no. 32 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2019 | |||||||
July | 1 | Balance | ✓ | 500 | |||
31 | 2 | 1,250 | 1,750 |
Table (12)
Account: Fees earned Account no. 41 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2019 | |||||||
July | 1 | Balance | ✓ | 6,200 | |||
11 | 1 | 1,000 | 7,200 | ||||
16 | 2 | 2,000 | 9,200 | ||||
23 | 2 | 2,500 | 11,700 | ||||
30 | 2 | 1,500 | 13,200 | ||||
31 | 2 | 3,000 | 16,200 | ||||
31 | Adjusting | 3 | 1,400 | 17,600 | |||
31 | Adjusting | 3 | 3,600 | 21,200 |
Table (13)
Account: Wages expense Account no. 50 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2019 | |||||||
July | 1 | Balance | ✓ | 400 | |||
14 | 1 | 1,200 | 1,600 | ||||
28 | 2 | 1,200 | 2,800 | ||||
31 | Adjusting | 3 | 140 | 2,940 |
Table (14)
Account: Office rent expense Account no. 51 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2019 | |||||||
July | 1 | Balance | ✓ | 800 | |||
1 | 1 | 1,750 | 2,550 |
Table (15)
Account: Equipment rent expense Account no. 52 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2019 | |||||||
July | 1 | Balance | ✓ | 675 | |||
13 | 1 | 700 | 1,375 |
Table (16)
Account: Utilities expense Account no. 53 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2019 | |||||||
July | 1 | Balance | ✓ | 300 | |||
27 | 2 | 915 | 1,215 |
Table (17)
Account: Music expense Account no. 54 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2019 | |||||||
July | 1 | Balance | ✓ | 1,590 | |||
21 | 2 | 620 | 2,210 | ||||
31 | 2 | 1,400 | 3,610 |
Table (18)
Account: Advertising expense Account no. 55 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2019 | |||||||
July | 1 | Balance | ✓ | 500 | |||
8 | 1 | 200 | 700 | ||||
22 | 2 | 800 | 1,500 |
Table (19)
Account: Supplies expense Account no. 56 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2019 | |||||||
July | 1 | Balance | ✓ | 180 | |||
31 | Adjusting | 3 | 745 | 925 |
Table (20)
Account: Insurance expense Account no. 57 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2019 | |||||||
July | 31 | Adjusting | 3 | 225 | 225 |
Table (21)
Account: Depreciation expense Account no. 58 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2019 | |||||||
July | 31 | Adjusting | 3 | 50 | 50 |
Table (22)
Account: Miscellaneous expense Account no. 59 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2019 | |||||||
July | 1 | Balance | ✓ | 415 | |||
4 | 900 | 1,315 | |||||
29 | 540 | 1,855 |
Table (23)
3.
To prepare: An adjusted trial balance of Company PS at July 31, 2019.
Explanation of Solution
Prepare an adjusted trial balance of Company PS at July 31, 2019 as follows:
Company PS | |||
Adjusted Trial Balance | |||
July 31, 2019 | |||
Particulars | Account No. |
Debit $ | Credit $ |
Cash | 11 | 9,945 | |
Accounts receivable | 12 | 4,150 | |
Supplies | 14 | 275 | |
Prepaid insurance | 15 | 2,475 | |
Office equipment | 17 | 7,500 | |
Accumulated depreciation-Equipment | 18 | 50 | |
Accounts payable | 21 | 8,350 | |
Wages payable | 22 | 140 | |
Unearned revenue | 23 | 3,600 | |
P's capital | 31 | 9,000 | |
P's drawings | 32 | 1750 | |
Fees earned | 41 | 21,200 | |
Wages expense | 50 | 2,940 | |
Office rent expense | 51 | 2,550 | |
Equipment rent expense | 52 | 1,375 | |
Utilities expense | 53 | 1,215 | |
Music expense | 54 | 3,610 | |
Advertising expense | 55 | 1,500 | |
Supplies expense | 56 | 925 | |
Insurance expense | 57 | 225 | |
Depreciation expense | 58 | 50 | |
Miscellaneous expense | 59 | 1,855 | |
42,340 | 42,340 |
Table (24)
The debit column and credit column of the adjusted trial balance are agreed, both having the balance of $42,340.
Want to see more full solutions like this?
Chapter 3 Solutions
CORPORATE FINANCIAL ACCT LL W/WP NOW
- 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: a. 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, 2016, transaction at the end of Chapter 2. b. Supplies on hand at July 31, 275. c. The balance of the prepaid insurance account relates to the July 1, 2016, transaction at the end of Chapter 2. d. Depreciation of the office equipment is 50. e. The balance of the unearned revenue account relates to the contract between PS Music and KXMD, described in the July 3, 2016, transaction at the end of Chapter 2. f. Accrued wages as of July 31, 2016, were 140. Instructions 1. Prepare adjusting journal entries. You will need the following additional accounts: 18 Accumulated DepreciationOffice 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.arrow_forwardThe 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 in 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 in 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 DepreciationOffice 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.arrow_forwardThe 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.arrow_forward
- 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: a. 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, 2016, transaction at the end of Chapter 2. b. Supplies on hand at July 31, 275. c. The balance of the prepaid insurance account relates to the July 1, 2016, transaction at the end of Chapter 2. d. Depreciation of the office equipment is 50. e. The balance of the unearned revenue account relates to the contract between PS Music and KXMD, described in the July 3, 2016, transaction at the end of Chapter 2. f. Accrued wages as of July 31, 2016, were 140. Instructions 1. Prepare adjusting journal entries. You will need the following additional accounts: 18 Accumulated DepreciationOffice 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.arrow_forwardOn July 1, a client paid an advance payment (retainer) of $5,000 to cover future legal services. During the period, the company completed $3,500 of the agreed-on services for the client. There was no beginning balance in the Unearned Revenue account for the period. Based on the information provided, A. Make the December 31 adjusting journal entry to bring the balances to correct. B. Show the impact that these transactions had.arrow_forwardOn July 1, a client paid an advance payment (retainer) of $10,000, to cover future legal services. During the period, the company completed $6,200 of the agreed-on services for the client. There was no beginning balance in the Unearned Revenue account for the period. Based on the information provided, make the journal entries needed to bring the balances to correct for: A. original transaction B. December 31 adjustmentarrow_forward
- The trial balance for Wilson Financial Services on January 31 is as follows: Data for month-end adjustments are as follows: a. Expired or used-up insurance, 750. b. Depreciation expense on equipment, 300. c. Wages accrued or earned since the last payday, 1,055 (owed and to be paid on the next payday). d. Supplies used, 535. Required 1. Complete a work sheet for the month. (Skip this step if using CLGL.) 2. Journalize the adjusting entries. 3. If using CLGL, prepare an adjusted trial balance. 4. Prepare an income statement, a statement of owners equity, and a balance sheet. Assume that no additional investments were made during January.arrow_forwardThe unadjusted trial balance of La Mesa Laundry at August 31, 2016, the end of the fiscal year, follows: The data needed to determine year-end adjustments are as follows: a. Wages accrued but not paid at August 31 are 2,200. b. Depreciation of equipment during the year is 8,150. c. Laundry supplies on hand at August 31 are 2,000. d. Insurance premiums expired during the year are 5,300. Instructions 1. For each account listed in the unadjusted trial balance, enter the balance in a T account. Identify the balance as Aug. 31 Bal. In addition, add T accounts for Wages Payable, Depreciation Expense, Laundry Supplies Expense, Insurance Expense, and Income Summary. 2. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. Add the accounts listed in part (1) as needed. 3. Journalize and post the adjusting entries. Identify the adjustments by Adj. and the new balances as Adj. Bal. 4. Prepare an adjusted trial balance. 5. Prepare an income statement, a statement of owners equity (no additional investments were made during the year), and a balance sheet. 6. Journalize and post the closing entries. Identify the closing entries by Clos. 7. Prepare a post-closing trial balance.arrow_forwardThe trial balance of Wikki Cleaners at December 31, 2012, the end of the current fiscal year, is as follows: Information for the adjusting entries is as follows: a. Cleaning supplies on hand on December 31, 2012, 18,750. b. Insurance premiums expired during the year, 1,800. c. Depreciation on equipment during the year, 21,600. d. Wages accrued but not paid at December 31, 2012, 1,830. Suppose you discover that an assistant in your department had misunderstood your instructions and had provided you with the wrong information on two of the adjusting entries. Cleaning supplies consumed during the year should have been 18,750, and insurance premiums unexpired at year-end were 1,800. Make the corrections on your worksheet and save the corrected file as F1WORK4. Reprint the worksheet.arrow_forward
- The trial balance of The New Decors for the month ended September 30 is as follows: Data for the adjustments are as follows: a. Expired or used-up insurance, 425. b. Depreciation expense on equipment, 2,750. c. Wages accrued or earned since the last payday, 475 (owed and to be paid on the next payday). d. Supplies remaining at end of month, 215. Required 1. Complete a work sheet. (Skip this step if using GL.) 2. Journalize the adjusting entries. If you are using CLGL, use the year 2020 when recording transactions.arrow_forwardOn September 1, a company received an advance rental payment of $12,000, to cover six months rent on an office building. There was no beginning balance in the Unearned Rent account for the period. Based on the information provided, A. Make the December 31 adjusting journal entry to bring the balances to correct. B. Show the impact that these transactions had.arrow_forwardThe unadjusted trial balance of Lakbay Tours as of December 31, 2018 is shown below: Ted Solomon, the owner, made an additional investment of P100,000 on March 1, 2018. On December 31, 2018, the following data were accumulated for use in making the adjusting entries: The company received an 18% P16,000 note from a key customer dated November 16, 2018. The prepaid rent has a beginning balance of P54,000 representing payment made for six month’s rent. During 2018, another two rent payments were made: P20,000 on June 30 and P19,000 on December 30. It is the policy of the lessor that rental be paid in advance for six months. The company bought all of its equipment on January 1, 2016. The equipment has an estimated total residual value of P12,000. The company uses the straight-line method of depreciation. Hint: Determine the annual depreciation based on the total accumulated depreciation and theacquisition date. Salaries earned by casual employees but unpaid and unrecorded amounted to…arrow_forward
- Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Financial & Managerial AccountingAccountingISBN:9781337119207Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningCorporate Financial AccountingAccountingISBN:9781305653535Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
- Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningAccounting (Text Only)AccountingISBN:9781285743615Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning