25E_1 - Horngren'S Financial And Managerial Accounting

Question

Question : The unadjusted trial balance for All Mopped Up Company, a cleaning service, is as follows:ALL MOPPED UP COMPANY Unadjusted Trial Balance December 31, 2018 Account Title Prepaid Insurance Cash Debit Credit Office Supplies Equipment Accumulated Depreciation—Equipment Accounts Payable Salaries Payable Unearned Revenue Common Stock Dividends Service Revenue Salaries Expense Supplies Expense Depreciation Expense—Equipment Insurance Expense Total Balance \( 800 \) 45,400 \( 45,400 \) 2,000 15,300 25,000 2,000 600 30,000 2,400 700 5,000 7,000 A, During the 12 months ended December 31, 2018, All Mopped Up: a. used office supplies of \(1,700. b. used prepaid insurance of \)580. c. depreciated equipment, \(500. d. accrued salaries expense of \)310 that hasn’t been paid yet. e. earned $400 of unearned revenue. Requirements 1. Open a T-account for each account using the unadjusted balances. 2. Journalize the adjusting entries using the letter and December 31 date in the date column. 3. Post the adjustments to the T-accounts, entering each adjustment by letter. Show each account’s adjusted balance.

Step-by-Step Solution

Answer

T accounts are as follows:

Cash
	$800

 

Office Supplies
	$2,000

 

Prepaid Insurance
	$600

 

Equipment
	$30,000

 

Accumulated Depreciation- Equipment
		$2,000

 

Accounts Payable
		$2,400

 

Salaries Payable
		$0

 

Unearned Revenue
		$700

 

 

Common Stock
		$15,300

 

Dividends
	$5,000

 

Service Revenue
		$25,000

 

Salaries Expense
	$7,000

 

Supplies Expense
	$0

 

Insurance Expense
	$0

 

Depreciation Expense-Equipment
	$0

 

Step-by-Step-Solution Step1: Explanation on T account

T account is prepared in the T style fortmat, which records the changes in the accounts.

Step2: Explanation on Adjusting Entries

Adjusting entries are the year end entries, which are recorded to record the accrued revenues and expenses for the period.