Textbook Problem

Adjusting entries and adjusted trial balances

Sears Editing Company is a small editorial services company owned and operated by Deloris Sears. On January 31, 20Y1, the end of the current year, Sears Editing Company’s accounting cleric prepared the following unadjusted trial balance:

Sears Editing Company Unadjusted Trial Balance January 11, 20Y1
	Debit	Credit
	Balances	Balances
Cash	7,500
Accounts Receivable	38,400
Prepaid Insurance	7,200
Supplies	1,980
Land	112,500
Building	150,250
Accumulated Depreciation—Building		87,550
Equipment	135,300
Accumulated Depreciation—Equipment		97,950
Accounts Payable		12,150
Unearned Rent		6,750
Common Stock		75,000
Retained Earnings		146,000
Dividends	15,000
Fees Earned		324,600
Salaries and Wages Expense	193,370
Utilities Expense	42,375
Advertising Expense	22,800
Repairs Expense	17,250
Miscellaneous Expense	6,075
	750,000	750,000

  The data needed to determine year-end adjustment are as follows:

• Unexpired insurance at January 31, $2,400.

• Supplies on hand at January 31, $250.

• Depreciation of building for the year, $6,600.

• Depreciation of equipment for the year, $3,500,

• Rent unearned at January 31, $2,750.

• Accrued salaries and wages at January 31, $1,800.

• Fees earned but unbilled on January 31, $15,000.

  Instructions

1. Journalize the adjusting entries using the following additional accounts: Salaries and Wages Payable; Rent Revenue. Insurance Expense; Depreciation Expense—Building: Depreciation Expense—Equipment, and Supplies Expense.

2. Determine the balances of the accounts affected by the adjusting entries, and prepare an adjusted trial balance.