Question

The unadjusted trial balance of Canton Air Purification System at December 31, 2014, and the data needed for the adjustments follow.


Adjustment data at December 31 follow:
a. On December 15, Canton contracted to perform services for a client receiving $ 2,000 in advance. Canton recorded this receipt of cash as Unearned Revenue. As of December 31, Canton has completed $ 1,800 of the services.
b. Canton prepaid two months of rent on December 1.
c. Canton used $ 400 of office supplies during the month.
d. Depreciation for the equipment is $ 700.
e. Canton received a bill for December’s online advertising, $ 400. Canton will not pay the bill until January. (Use Accounts Payable.)
f. Canton pays its employees weekly on Monday for the previous week’s wages. Its employees earn $ 2,000 for a five-day workweek. December 31 falls on Wednesday this year.
g. On October 1, Canton agreed to provide a four-month air system check (beginning October 1) for a customer for $ 2,040. Canton 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 Canton Air Purification System use the adjusted trialbalance?


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  • CreatedJanuary 16, 2015
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