The unadjusted trial balance of Midway Inn Company at December 31, 2024, and the data needed for the adjustments follow:

Adjustment data at December 31 follow: 

a. As of December 31, Midway Inn had $800 of Prepaid Insurance remaining. 

b. At the end of the month, Midway Inn had $500 of office supplies remaining. 

c. Depreciation on the building is $2,100. 

d. Midway Inn pays its employees on Friday for the weekly salaries. Its employees earn $1,950 for a five-day workweek. December 31 falls on Tuesday this year. 

e. On November 20, Midway Inn contracted to perform services for a client, receiving $1,600 in advance. Midway Inn recorded this receipt of cash as Unearned Revenue. As of December 31, Midway Inn 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.

Transcribed Image Text:

MIDWAY INN COMPANY Unadjusted Trial Balance December 31, 2024 Account Title Cash Accounts Receivable Prepaid Insurance Office Supplies Building Accumulated Depreciation-Building Accounts Payable Salaries Payable Unearned Revenue Midway, Capital Midway, Withdrawals Service Revenue Salaries Expense Insurance Expense Depreciation Expense Building Advertising Expense Supplies Expense Total Balance Debit $ 14,500 15,100 1,400 700 518,000 1,890 2,600 680 Credit $ 310,000 4,210 1,600 222,160 16,900 $ 554,870 $ 554,870