Trial Balance and Adjusting Entries Deliverall, a mailing service, has just completed its first full year of
Question:
Trial Balance and Adjusting Entries Deliverall, a mailing service, has just completed its first full year of operations on December 31, 2012. The firm's general ledger account balances before year-end adjustments are given below. No adjusting entries have been made to the accounts at any time during the year. Assume that all balances are normal.
| Cash | $2,530 | | Accounts Payable | $2,970 |
| Accounts Receivable | 5,632 | | Common Stock | 10,489 |
| Prepaid Advertising | 1,848 | | Mailing Fees Earned | 94,600 |
| Supplies | 6,897 | | Wages Expense | 42,680 |
| Equipment | 46,464 | | Rent Expense | 6,936 |
| Notes Payable | 8,250 | | Utilities Expense | 3,322 |
An analysis of the firm's records reveals the following:
The balance in Prepaid Advertising represents the amount paid for newspaper advertising for one year. The agreement, which calls for the same amount of space each month, covers the period from February 1, 2012 to January 31, 2013. Deliverall did not advertise during its first month of operations.
The equipment, purchased January 1, has an estimated life of 8 years.
Utilities expense does not include expense for December estimated at $258. The bill will not arrive until January 2013.
At year-end, employees have earned $1,320 in wages that will not be paid until January.
Supplies on hand at December 31 are $1,672.
At year-end, unpaid interest of $495 has accrued on notes payable.
The firm's lease calls for rent of $578 per month payable on the first of each month, plus an amount equal to 0.5% of annual mailing fees earned. The rental percentage is payable within 15 days after the end of the year.
Required
a. Demonstrate that the sum of the debits equals the sum of the credits for the unadjusted account balances shown above by preparing an unadjusted trail balance as of December 31, 2012.
b. Record adjusting entries in general journal form.
| Deliverall Unadjusted Trial Balance December31, 2012 | ||
| | Debit | Credit |
| Cash | | |
| Accounts Receivable | | |
| Prepaid Advertising | | |
| Supplies | | |
| Equipment | | |
| Accounts Payable | | |
| Notes Payable | | |
| Common Stock | | |
| Mailing Fees Earned | | |
| Wage Expenses | | |
| Rent Expenses | | |
| Utilities Expenses | | |
| Totals | | |
b. in a general journal
Expert Answer:
a Deliverall Unadjusted Trial Balance December 31 2012 Account Titles Debit Credit Cash 2530 ... View the full answer
