This problem continues the Canyon Canoe Company situation from Chapter 2. You will need to use the unadjusted trial balance and posted T-accounts that you prepared in Chapter 2.

At December 31, the business gathers the following information for the adjusting entries:

a. Office supplies on hand, \(165

b. Rent of one month has been used. (Hint: See Dec. 1 transaction from Chapter 2)

c. Determine the depreciation on the building using straight-line depreciation.

Assume the useful life of the building is five years and the residual value is \)5,000. (Hint: The building was purchased on December 1.)

d. \(400 of unearned revenue has now been earned.

e. The employee who has been working the rental booth has earned \)1,250 in wages that will be paid January 15, 2019.

f. Canyon Canoes has earned \(1,850 of canoe rental revenue that has not been recorded or received.

g. Determine the depreciation on the canoes purchased on November 3 using straight-line depreciation. Assume the useful life of the canoes is 4 years and the residual value is \)0.

h. Determine the depreciation on the canoes purchased on December 2 using straight-line depreciation. Assume the useful life of the canoes is 4 years and the residual value is \(0.

i. Interest expense accrued on the notes payable, \)50.

Requirements

1. Journalize and post the adjusting entries using the T-accounts that you completed in Chapter 2. In the T-accounts, denote each adjusting amount as Adj.and an account balance as Balance.

2. Prepare an adjusted trial balance as of December 31, 2018.

Date

Particular

Debit

Credit

a.

Supplies Expense

$ 1,085

Office supplies

$ 1,085

Being supplies expense incurred

b.

Rent Expense

1,000

Prepaid Rent

1,000

Being rent incurred for one month

c.

Depreciation Expense – Building

500

Accumulated Depreciation – Building

500

Being depreciation incurred on building

d.

Unearned Revenue

400

Service Revenue

400

Being Unearned revenue has been earned

e.

Salary Expense

1,250

Outstanding Salary

1,250

Being salary outstanding to be paid in Jan

f.

Accounts Receivables

1,850

Rental Revenue

1,850

Being rental revenue has been earned but not received

g.

Depreciation Expense – Canoes

200

Accumulated Depreciation – Canoes

200

Being depreciation incurred on canoes for two months

h.

Depreciation Expense – Canoes

150

Accumulated Depreciation – Canoes

150

Being depreciation incurred on canoes for two months

i.

Interest Expense

50

Accrued Interest

50

Being interest due on notes payable

Total

$ 6,485

$ 6,485

CANYON CANOE COMPANY

Adjusted Trial Balance

December 31, 2018

Account Title

Debit ($)

Credit ($)

Cash

$ 12,125

Accounts Receivables

7,600

Office Supplies

165

Prepaid Rent

2,000

Land

85,000

Building

35,000

Accumulated Depreciation – Building

$ 500

Canoes

12,000

Accumulated Depreciation – Canoes

350

Accounts Payable

3,050

Utilities Payable

295

Telephone Payable

325

Unearned Revenue

350

Notes Payable

7,200

Wilson, Capital

136,000

Wilson, Withdrawals

450

Canoe Rental Revenue

14,250

Rent Expense

2,200

Wages Expense

3,300

Utilities Expense

445

Telephone Expense

500

Service Revenue

400

Salary Expense

1,250

Outstanding Salary

1,250

Depreciation Expense – Building

500

Depreciation Expense – Canoes

350

Interest Expense

50

Accrued Interest

50

Supplies Expense

1,085

Total

$164,020

$164,020