The unadjusted trial balance as of December 31, 2018, for the Bagley Consulting
ID: 2332746 • Letter: T
Question
The unadjusted trial balance as of December 31, 2018, for the Bagley Consulting Company appears below. December 31 is the company’s fiscal year-end.
The buildings have an estimated useful life of 50 years with no salvage value. The company uses the straight-line depreciation method.
The office equipment is depreciated at 10 percent of original cost per year.
Prepaid insurance expired during the year, $1,400.
Accrued salaries and wages at year-end, $1,100.
Deferred rent revenue at year-end should be $650.
Required:
1. From the trial balance and information given, prepare adjusting entries.
2. Post the beginning balances and adjusting entries into the appropriate t-accounts.
3. Prepare an adjusted trial balance.
4. Prepare closing entries.
5. Prepare a post-closing trial balance.
Explanation / Answer
Answer: Unadjusted Adjusted Post closing Requirement 3, 5 Account Title Debits Credits Debits Credits Debits Credits Cash 5,850 5,850 5,850 Accounts receivable 7,000 7,650 7,650 Prepaid insurance 2,800 1,400 1,400 Land 1,95,000 1,95,000 1,95,000 Buildings 52,500 52,500 52,500 Accumulated depreciation—buildings 21,000 22,050 22,050 Office equipment 84,000 84,000 84,000 Accumulated depreciation—office equipment 33,600 42,000 42,000 Accounts payable 27,800 27,800 27,800 Salaries and wages payable 0 1100 1100 Deferred rent revenue 0 650 650 Common stock 2,00,000 2,00,000 2,00,000 Retained earnings 45,600 45,600 52,800 Sales revenue 77,500 77,500 Interest revenue 3,600 3,600 Rent revenue 4,200 4,200 Salaries and wages expense 29,000 30,100 Depreciation expense 0 9450 Insurance expense 0 1400 Utility expense 19,700 19,700 Maintenance expense 17,450 17,450 Totals 4,13,300 4,13,300 4,24,500 4,24,500 3,46,400 3,46,400 Requirement 1 Journal Entries Date Accounts title and explanation Debit Credit a. Depreciation expenses $ 1,050 (52,500/50) Accumulated depreciation-Building $ 1,050 (Being depreciation recorded on building) b. Depreciation expenses $ 8,400 (84,000*10%) Accumulated depreciation-Office Equipment $ 8,400 (Being depreciation recorded on equipment) c. Insurance expense $ 1,400 Prepaid expense $ 1,400 (Being prepaid insurance expires and recorded as expense) d. Salaries and wages expense $ 1,100 Salaries and wages payable $ 1,100 (Being accrued salaries recorded ) e. Deferred rent revenue $ 650 Rent revenue $ 650 (To record deferred rent revenue) Requirement 2 T-accounts Cash Bal. 5850 Accounts receivable Bal. 7000 Prepaid Insurance Bal. 2800 1400 End. Bal 1400 Land Bal. 1,95,000 Building Bal. 52500 Accumulated Depreciation-Building Bal. 21000 1050 End. Bal 22050 Office Equipment Bal. 84000 Accumulated Depreciation-Office Equipment Bal. 33600 8400 End. Bal 42000 Accounts Payable Bal. 27800 Salaries and wages payable 1100 Deferred rent revenue 650 Common Stock Bal. 2,00,000 Retained earning Bal. 45600 Sales Revenue Bal. 77500 Interest Revenue Bal. 3600 Rent revenue Bal. 4200 Salaries and wages expense Bal 29000 1100 End Bal. 30100 Depreciation expense $ 1,050 $ 8,400 End. Bal $ 9,450 Insurance Expense 1400 Utilities Expense Bal. 19700 Maintenance expense Bal. 17450 Requirement 4 Journal Entries Date Accounts title and explanation Sales Revenue 77500 Interest Revenue 3600 Rent Revenue 4200 Income Summary 85300 (To transfer revenue to income summary account) Income Summary 78,100 Salaries and wages expense 30,100 Depreciation expense 9,450 Insurance expense 1,400 Utility expense 19,700 Maintenance expense 17,450 (To transfer expenses to income summary) Income Summary 7,200 Retained Earning 7,200
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