25E_2 - 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

Adjusting entries are as follows:

	Journal entry
Transactions	Accounts and Explanation	Debit	Credit
(a)	Supplies Expense	$1,700
	Office Supplies		$1,700
	To record office supplies used
(b)	Insurance Expense	$580
	Prepaid Rent		$580
	To record insurance expense
(c)	Depreciation Expense—Equipment	$500
	Accumulated Depreciation—Equipment		$500
	To record depreciation on equipment
(d)	Salaries Expense	$310
	Salaries Payable		$310
	To record accrued salaries expense
(e)	Unearned Revenue	$400
	Service Revenue		$400
	To record service revenue earned

Step-by-Step-Solution Step1: Explanation on Adjusting Entries

Adjustries entries are used to record the accrued revenues and expenses at the end of the period.

Step2: Explanation on Adjusted Trial Balance

After the adjusting entries are recorded, it is posted into the ledger account, then the balance of these account is used to prepare adjusted trial balance.