Nally Company is in the process of completing the information processing cycle at the end of the accounting year, December 31, 2018. The worksheet and financial statements have been prepared. The next step is to journalize the adjusting entries. The following two trial balances were taken directly from the completed worksheet:

Required

By examining the amounts in each trial balance, reconstruct the adjusting entries that were made between the unadjusted trial balance and the adjusted trial balance. Explain each adjusting entry.

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December 31, 2018 Unadjusted Trial Balance Adjusted Trial Balance Debit Credit Account Titles Debit Credit a. Cash b. Accounts receivable c. Prepaid insurance d. Equipment e. Accumulated depreciation f. Income taxes payable g. Contributed capital h. Retained earnings, Jan. 1, 2018 i. Service revenue j. Salary expense k. Depreciation expense 1. Insurance expense m. Income tax expense 9,300 9,300 500 1,350 2,000 120,000 120,000 22,000 25,000 4,100 50,000 50,000 26,300 26,300 51,000 51,500 18,000 18,000 3,000 650 4,1 00 149,300 156,900 149,300 156,900