Question

The unadjusted trial balance of Grant Computer Services, Inc., at January 31, 2015, does not balance. The list of accounts and their balances is given below. The trial balance needs to be prepared and adjusted before the financial statements at January 31, 2015, can be prepared. The manager of Grant Computer Services also needs to know the business’s current ratio.
Cash.................................................... $ 8,000
Accounts receivable............................. 4,200
Supplies............................................... 800
Prepaid rent......................................... 1,200
Land.................................................... 43,000
Accounts payable................................ 12,000
Salary payable..................................... 0
Unearned service revenue.................... 700
Note payable, due in three years ......... 23,400
Common stock.................................... 5,000
Retained earnings................................ 9,300
Service revenue.................................... 9,100
Salary expense..................................... 3,400
Rent expense....................................... 0
Advertising expense............................. 900
Supplies expense.................................. 0

Requirements
1. How much out of balance is the trial balance? Notes Payable (the only error) is understated.
2. Grant Computer Services needs to make the following adjustments at January 31:
a. Supplies of $400 were used during January.
b. Te balance of Prepaid Rent was paid on January 1 and covers the whole year 2015. No adjustment was made on January 31.
c. At January 31, Grant Computer Services owed employees $1,000.
d. Unearned service revenue of $500 was earned during January.
Prepare a corrected, adjusted trial balance. Give Notes Payable its correct balance.
3. After the error is corrected and after these adjustments are made, compute the current ratio of Grant Computer Services, Inc. If your business had this current ratio, could you sleep at night?



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  • CreatedJuly 25, 2014
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