25E_3 - 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
Bal.	$800

Office Supplies
	$2,000	$1,700	(a)
Bal.	$300

Prepaid Insurance
	$600	$580	(b)
Bal.	$20

 

Equipment
	$30,000
Bal.	$30,000

 

Accumulated Depreciation- Equipment
		$2,000
		$500	(c)
		$2,500	Bal.

 

Accounts Payable
		$2,400
		$2,400	Bal.

 

Salaries Payable
		$310	(d)
		$310	Bal.

 

Unearned Revenue
(e)	$400	$700
		$300	Bal.

 

 

Common Stock
		$15,300
		$15,300	Bal.

 

Dividends
	$5,000
Bal.	$5,000

 

Service Revenue
		$25,000
		$400	(e)
		$25,400	Bal.

 

Salaries Expense
	$7,000
(d)	$310
Bal.	$7,310

 

Supplies Expense
(a)	$1,700
Bal.	$1,700

 

Insurance Expense
(b)	$580
Bal.	$580

 

Depreciation Expense-Equipment
(c)	$500
Bal.	$500

 

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.}