Adjustment data at December 31 follow: On December 15, Arlington contracted to p

Question

Adjustment data at December 31 follow: On December 15, Arlington contracted to perform services for a client receiving $2,600 in advance. Arlington recorded this receipt of cash as Unearned Revenue. As of December 31, Arlington has completed $1,100 of the services. Arlington prepaid two months of rent on December 1. Arlington used $600 of office supplies. Depreciation for the equipment is $900. Arlington received a bill for Decembers online advertising, $900. Arlington will not pay the bill until January. (Use Accounts Payable.) Arlington pays its employees on Monday for the previous weekly wages. Its employees earn $1,500 for a five-day workweek. December 31 falls on Wednesday this year. On October 1, Arlington agreed to provide a four-month air system check (beginning October 1) for a customer for $3,200. Arlington has completed the system check every month, but payment has not yet been received and no entries have been made. Journalize the adjusting entries on December 31. Using the unadjusted trial balance, open the T-accounts with the unadjusted balances. Post the adjusting entries to the T-accounts. Prepare the adjusted trial balance. How will Arlington Air Purification System use the adjusted trial balance?

Explanation / Answer

Date

Account Titles and Explanation

Debit

Credit

a)

12/15

Cash

$2600

Unearned revenue

$2600

12/31

Unearned revenue

$1100

Revenue services

$1100

b)

12/1

Rent

$1200

Prepaid rent

$1200

c)

Office supplies

$600

Cash

$600

d)

Depreciation

$900

Equipment

$900

e)

Advertisement expense

$900

Account payable

$900

f)

Salary

$900

Cash

$900

g)

Account receivable

$2400

To revenue service

$2400

Date

Account Titles and Explanation

Debit

Credit

a)

12/15

Cash

$2600

Unearned revenue

$2600

12/31

Unearned revenue

$1100

Revenue services

$1100

b)

12/1

Rent

$1200

Prepaid rent

$1200

c)

Office supplies

$600

Cash

$600

d)

Depreciation

$900

Equipment

$900

e)

Advertisement expense

$900

Account payable

$900

f)

Salary

$900

Cash

$900

g)

Account receivable

$2400

To revenue service

$2400

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