The following additional information is available: a) The prepaid insurance was for a 5-month insurance policy purchased
Question:
The following additional information is available:
a) The prepaid insurance was for a 5-month insurance policy purchased on November 1, 2021.
b) A physical count of supplies inventory shows $500 of supplies still on hand.
c) The building was purchased on January 1, 2021. It has an estimated useful life of 20 years and will have a salvage value of 100,000.
d) 5 days of wages were earned by employees in the last week of December totaling $15,000. The normal payday for these wages occurs in January of the next year.
e) The balance in unearned rent is for a five-month contract started on November 1. The prepayment was deposited to our bank account that day and no adjustments have been made to the unearned rent account as of yet.
f) $100 of interest expense has accrued but not yet recorded.
g) Income tax expense for the year is actually $16,000. This amount will be paid next year.
h) Interest revenue of $500 was earned but not recorded
i) $200 of Accounting Expense was incorrectly recorded into Telephone Expense.
Bestco Corporation
Unadjusted Trial Balance
At December 31, 2021
No.
Account
Debit
Credit
100
Cash
$ 3,000
110
Accounts Receivable
2,000
115
Interest Receivable
0
150
Prepaid Insurance
5,000
160
Supplies
2,500
180
Land
50,000
185
Building
200,000
190
Acc. Dep. Building
-
200
Accounts Payable
10,000
215
Wages Payable
20,000
220
Building Maintenance payable
1,000
225
Interest payable
3,000
230
Unearned Rent
5,000
235
Income Tax Payable
10,000
300
Share Capital
190,500
320
Dividends
10,000
325
Retained Earnings
500
Service Revenue
176,000
520
Rent Revenue
10,000
530
Interest Revenue
0
600
Advertising Expense
6,000
610
Accounting Expense
18,000
615
Depreciation Expense
0
620
Insurance Expense
8,000
625
Interest Expense
2,000
630
Building Maintenance Expense
15,000
635
Wages Expense
90,000
640
Supplies Expense
3,000
650
Telephone Expense
1,000
800
Income Tax Expense
10,000
Total
$ 425,500
$ 425,500
Required:
1. Prepare all necessary adjusting entries for the end of year in the general journal. Use the letters (a,b,c) instead of the date for the entries.
2. Prepare an adjusted trial balance at December 31, 2021.
3. Prepare an income statement, statement of changes in equity, and statement of financial position (in report format).
4. Prepare closing entries in the general journal.
5. Prepare a post-closing trial balance.