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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—Equipment Accounts Payable Salaries Payable Unearned Revenue Common Stock Dividends Service Revenue Salaries Expense Rent Expense Depreciation Expense—Equipment 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’s online advertising, \(1,100. Anniston will not pay the bill until January. (Use Accounts Payable.) f. Anniston pays its employees on Monday for the previous week’s wages. Its employees earn \)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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