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Chapter 3: Q 36PGA-2 (page 172)

The unadjusted trial balance of Guthrie Inn Company at December 31, 2018, and the data needed for the adjustments follow. Adjustment data at December 31 follow: GUTHRIE INN COMPANY Unadjusted Trial Balance December 31, 2018 Account Title Prepaid Insurance Cash Debit Credit Accounts Receivable Office Supplies Building Accumulated Depreciation—Building Accounts Payable Salaries Payable Unearned Revenue Common Stock Dividends Service Revenue Salaries Expense Insurance Expense Depreciation Expense—Building Advertising Expense Supplies Expense Total Balance \( 13,500 \) 569,760 \( 569,760 530,000 288,950 3,600 15,500 15,100 4,600 800 \) 260,000 1,710 2,340 2,800 620 G a. As of December 31, Guthrie had \(700 of Prepaid Insurance remaining. b. At the end of the month, Guthrie had \)500 of office supplies remaining. c. Depreciation on the building is \(1,200. d. Guthrie pays its employees weekly on Friday. Its employees earn \)1,800 for a five-day workweek. December 31 falls on Wednesday this year. e. On November 20, Guthrie contracted to perform services for a client receiving \(3,600 in advance. Guthrie recorded this receipt of cash as Unearned Revenue. As of December 31, Guthrie has \)1,600 still unearned. Requirements 1. Journalize the adjusting entries on December 31. 2. Using the unadjusted trial balance, open the accounts (use a four-column ledger) with the unadjusted balances. Post the adjusting entries to the ledger accounts. 3. Prepare the adjusted trial balance. 4. Assuming the adjusted trial balance has total debits equal to total credits, does this mean that the adjusting entries have been recorded correctly? Explain

Short Answer

Expert verified

T accounts are as follows:

Cash

$13,500

Bal.

$13,500

Accounts Receivable

$15,100

Bal.

$15,100

Office Supplies

$800

$300

(b)

Bal.

$500

Prepaid Insurance

$4,600

$3,900

(a)

Bal.

$700

Building

$530,000

Bal.

$530,000

Accumulated Depreciation- Equipment

$260,000

$1,200

(c)

$261,200

Bal.

Accounts Payable

$1,710

$1,710

Bal.

Salaries Payable

$1,080

(d)

$1,080

Bal.

Unearned Revenue

(e)

$2,000

$3,600

$1,600

Bal.

Common Stock

$288,950

$288,950

Bal.

Dividends

$2,340

Bal.

$2,340

Service Revenue

$15,500

$2,000

(e)

$17,500

Bal.

Salaries Expense

$2,800

(d)

$1,080

Bal.

$3,880

Insurance Expense

(a)

$3,900

Bal.

$3,900

Depreciation Expense-Building

(c)

$1,200

Bal.

$1,200

Advertising Expense

$620

Bal.

$620

Supplies Expense

(b)

$300

Bal,

$300

Step by step solution

01

Step-by-Step-SolutionStep 1: 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 :At the beginning of the year, office supplies of \(1,200 were on hand. During the year, Tempo Air Conditioning Service paid \)4,000 for more office supplies. At the end of the year, Tempo has $800 of office supplies on hand. Requirements 1. Record the adjusting entry assuming that Tempo records the purchase of office supplies by initially debiting an asset account. Post the adjusting entry to the Office Supplies and Supplies Expense T-accounts. Make sure to include the beginning balance and purchase of office supplies in the Office Supplies T-account. 2. Record the adjusting entry assuming that Tempo records the purchase of office supplies by initially debiting an expense account. Post the adjusting entry to the Office Supplies and Supplies Expense T-accounts. Make sure to include the beginning balance in the Office Supplies T-account and the purchase of office supplies in the Supplies Expense T-account. 3. Compare the ending balances of the T-accounts under both approaches. Are they the same?

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Question :Suppose on January 1, Andrew’s Tavern prepaid rent of $16,800 for the full year. At November 30, how much rent expense should be recorded for the period January 1 through November 30?

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