Question: The unadjusted trial balance of Lexington Inn Company at December

The unadjusted trial balance of Lexington Inn Company at December 31, 2014, and the data needed for the adjustments follow.


Adjustment data at December 31 follow:
a. As of December 31, Lexington had $ 700 of Prepaid Insurance remaining.
b. At the end of the month, Lexington had $ 600 of office supplies remaining.
c. Depreciation on the building is $ 1,600.
d. Lexington pays its employees weekly on Friday. Its employees earn $ 2,000 for a five-day workweek. December 31 falls on Wednesday this year.
e. On November 20, Lexington contracted to perform services for a client receiving $ 2,400 in advance. Lexington recorded this receipt of cash as Unearned Revenue. As of December 31, Lexington has $ 1,400 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.


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  • CreatedJanuary 16, 2015
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