Question: Gourmet Teas Coffee Inc has the following account balances

Gourmet Teas & Coffee, Inc., has the following account balances at December 31, the end of the fiscal year:
Prepaid insurance ...... $ 4,000
Rental income ....... 35,670
Unearned rental income ... 3,800
Accumulated depreciation ... 7,625
Salaries payable ....... 5,550
Property tax expense ..... 4,398
Depreciation expense ..... 7,625
Salaries expense ....... 10,400

The following information is available at the end of the year:
a. $1,000 worth of the prepaid insurance has not yet expired.
b. Of the unearned rental income only $1,500 remains unearned.
c. The business actually owes salaries of $5,500; the accountant recorded $50 extra by mistake.
d. The company owes an additional $4,700 in property taxes, not yet recorded.
e. Due to a clerical error, the depreciation expense amount is incorrect. It has been recalculated, and the total depreciation expense should be $8,750 for the year.

1. Prepare the journal entries necessary to adjust the accounts.
2. Use T-accounts to compute and present the balances in these accounts after the adjustments have been posted.
3. Prepare the closing entries.

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  • CreatedSeptember 01, 2014
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