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Chapter 3: 35PGA_2 (page 171)

Question :The unadjusted trial balance of Anniston Air Purification System at December 31, 2018, and the data needed for the adjustments followANNISTON AIR PURIFICATION SYSTEM Unadjusted Trial Balance December 31, 2018 Adjustment data at December 31 followAccount Title Prepaid Rent Cash Debit Credit Accounts Receivable Office Supplies Equipment Accumulated Depreciation鈥擡quipment Accounts Payable Salaries Payable Unearned Revenue Common Stock Dividends Service Revenue Salaries Expense Rent Expense Depreciation Expense鈥擡quipment Advertising Expense Supplies Expense Total Balance \( 7,600 \) 69,000 \( 69,000 22,000 43,800 3,100 15,300 19,700 2,900 1,800 \) 3,900 2,900 9,900 3,300 1,800 a. On December 15, Anniston contracted to perform services for a client receiving \(3,100 in advance. Anniston recorded this receipt of cash as Unearned Revenue. As of December 31, Anniston has completed \)2,100 of the services. b. Anniston prepaid two months of rent on December 1. (Assume the Prepaid Rent balance as shown on the unadjusted trial balance represents the two months of rent prepaid on December 1.) c. Anniston used \(750 of office supplies. d. Depreciation for the equipment is \)850. e. Anniston received a bill for December鈥檚 online advertising, \(1,100. Anniston will not pay the bill until January. (Use Accounts Payable.) f. Anniston pays its employees on Monday for the previous week鈥檚 wages. Its employees earn \)3,500 for a five-day workweek. December 31 falls on Wednesday this year. g. On October 1, Anniston agreed to provide a four-month air system check (beginning October 1) for a customer for $3,400. Anniston has completed the system check every month, but payment has not yet been received and no entries have been made. Requirements 1. Journalize the adjusting entries on December 31. 2. Using the unadjusted trial balance, open the T-accounts with the unadjusted balances. Post the adjusting entries to the T-accounts. 3. Prepare the adjusted trial balance. 4. How will Anniston Air Purification System use the adjusted trial balance?

Short Answer

Expert verified

T accounts are as follows:

Cash

$7,600

Bal.

$7,600

Accounts Receivable

$19,700

(g)

$2,550

Bal.

$22,250

Office Supplies

$1,800

$750

(c)

Bal.

$1,050

Prepaid Rent

$2,900

$1,450

(b)

Bal.

$1,450

Equipment

$22,000

Bal.

$22,000

Accumulated Depreciation- Equipment

$3,900

$850

$4,750

Bal.

Accounts Payable

$2,900

$1,100

(e)

$4,000

Bal.

Salaries Payable

$2,100

(f)

$2,100

Bal.

Unearned Revenue

(a)

$2,100

$3,100

$1,000

Bal.

Common Stock

$43,800

$43,800

Bal.

Dividends

$9,900

Bal.

$9,900

Service Revenue

$15,300

$2,100

(a)

$2,550

(g)

$19,950

Bal.

Salaries Expense

$3,300

(f)

$2,100

Bal.

$5,400

Rent Expense

(b)

$1,450

Bal.

$1,450

Depreciation Expense-Equipment

(d)

$850

Bal.

$850

Advertising Expense

$1,800

(e)

$1,100

Bal.

$2,900

Supplies Expense

(c)

$750

Bal,

$750

Step by step solution

01

Step-by-Step-SolutionStep1: Explanation on T account

T account is prepared in the T style fortmat, which records the changes in the accounts.

02

Explanation on Adjusting Entries

Adjusting entries are the year end entries, which are recorded to record the accrued revenues and expenses for the period.

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Most popular questions from this chapter

Question :Just Right Hair Stylists has begun the preparation of its worksheet as follows:


Year-end data include the following: a. Office supplies on hand, \(300. b. Depreciation, \)700. c. Accrued interest expense, $800. Complete Just Right鈥檚 worksheet through the adjusted trial balance section. In the adjustments section, mark each adjustment by letter

Question :The unadjusted trial balance for All Mopped Up Company, a cleaning service, is as follows: ALL MOPPED UP COMPANY Unadjusted Trial Balance December 31, 2018 Account Title Prepaid Insurance Cash Debit Credit Office Supplies Equipment Accumulated Depreciation鈥擡quipment Accounts Payable Salaries Payable Unearned Revenue Common Stock Dividends Service Revenue Salaries Expense Supplies Expense Depreciation Expense鈥擡quipment Insurance Expense Total Balance \( 800 \) 45,400 \( 45,400 \) 2,000 15,300 25,000 2,000 600 30,000 2,400 700 5,000 7,000 A, During the 12 months ended December 31, 2018, All Mopped Up: a. used office supplies of \(1,700. b. used prepaid insurance of \)580. c. depreciated equipment, \(500. d. accrued salaries expense of \)310 that hasn鈥檛 been paid yet. e. earned $400 of unearned revenue. Requirements 1. Open a T-account for each account using the unadjusted balances. 2. Journalize the adjusting entries using the letter and December 31 date in the date column. 3. Post the adjustments to the T-accounts, entering each adjustment by letter. Show each account鈥檚 adjusted balance.

XM, Ltd. was a small engineering firm that built high-tech robotic devices for electronics manufacturers. One very complex device was partially completed at the end of 2018. Barb McLauren, head engineer, knew the experimental technology was a failure and XM would not be able to complete the $20,000,000 contract next year. However, the corporation was getting ready to be sold in January. She told the controller that the device was 80% complete at year-end and on track for successful completion the following spring; the controller accrued 80% of the contract revenue at December 31, 2018. McLauren sold the company in January 2019 and retired. By mid-year, it became apparent that XM would not be able to complete the project successfully and the new owner would never recoup his investment.

Requirements

1. For complex, high-tech contracts, how does a company determine the percentage of completion and the amount of revenue to accrue?

2. What action do you think was taken by XM in 2019 with regard to the revenue that had been accrued the previous year?

Question: Hooten Carpentry had the following accounts and account balances after adjusting entries. Assume all accounts have normal balances. Prepare the adjusted trial balance for Hooten Carpentry as of December 31, 2018. Cash \( 4,025 Common Stock \) ? Land 5,000 Accounts Receivable 660 Utilities Expense 400 Office Supplies 120 Accounts Payable 225 Utilities Payable 210 Accumulated Depreciation鈥擡quipment 1,000 Service Revenue 12,000 Salaries Expense 550 Unearned Revenue 300 Supplies Expense 80 Depreciation Expense鈥擡quipment 800 Equipment 10,000 Dividends 500.

Question:Seth鈥檚 Tax Services had the following accounts and account balances after adjusting entries. Assume all accounts have normal balances.Cash Land Accounts Payable Utilities Payable Accumulated Depreciation鈥擡quipment Service Revenue Supplies Expense Dividends \( ? 26,000 150 3,700 1,800 75,000 1,100 14,000 Equipment Accounts Receivable Common Stock Office Supplies Utilities Expense Unearned Revenue Depreciation Expense鈥擡quipment Salaries Expense \) 11,000 4,950 700 22,600 1,650 900 1,900 5,600Prepare the adjusted trial balance for Seth鈥檚 Tax Services as of December 31, 2018.
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