Q37PGA-2 - Horngren'S Financial And Managerial Accounting

Question

Question : Greavy Theater Production Company’s partially completed worksheet as of December 31, 2018, follows. Adjustment data at December 31 follow: a. As of December 31, Greavy had performed \(500 of service revenue but has not yet billed customers. b. At the end of the month, Greavy had \)700 of office supplies remaining. c. Prepaid Insurance of \(3,900 remained. d. Depreciation expense, \)4,000. e. Accrued salaries expense of $200 that hasn’t been paid yet. Requirements 1. Complete the worksheet. Use letters a through e to label the five adjustments. 2. Journalize the adjusting entries.

Step-by-Step Solution

Answer

Answer:

Worksheet is as follows:

GREAVY THEATER PRODUCTION COMPANY
WORKSHEET
December 31, 2018
Account Name	Unadjusted Trial Balance		Adjustments			Adjusted  Trial Balance
	Debit	Credit		Debit	Credit		Debit	Credit
Cash	$4,300						$4,300
Accounts Receivable	5,900		(a)	$500			6,400
Office Supplies	1,900				$1,200	(b)	700
Prepaid Insurance	4,550				650	(c)	3,900
Equipment	30,000						30,000
Accumulated Depreciation—Equipment		$7,600			4,000	(d)		11,600
Accounts Payable		3,600						3,600
Salaries Payable					$200	(e)		200
Common Stock		21,950						21,950
Dividends	30,500						30,500
Service Revenue		77,000			500	(a)		77,500
Depreciation Expense—Equipment			(d)	4,000			4,000
Supplies Expense			(b)	1,200			1,200
Utilities Expense	5,500						5,500
Salaries Expense	27,500		(e)	200			27,700
Insurance Expense			(c)	650			650
Total	$110,150	$110,150		$6,550	$6,550		$114,850	$114,850

Step 1: Calculation of Supplies Expense

Supplies expense is calculated as follows: 

 $$\begin{gathered} \mathbf{SuppliesExpense}\mathbf{=}\mathbf{UnadjustedBalance}-\mathbf{EndingBalance} \\ \mathbf{=}\mathbf{\$}\mathbf{1}\mathbf{,}\mathbf{900}-\mathbf{\$}\mathbf{700} \\ \mathbf{=}\mathbf{\$}\mathbf{1}\mathbf{,}\mathbf{200} \end{gathered}$$

Step 2: Calculation of Insurance Expense

Insurance expense is calculated as follows

$$\begin{gathered} \mathbf{InsuranceExpense}\mathbf{=}\mathbf{UnadjustedBalance}\mathbf{PrepaidInsurance}-\mathbf{EndingBalance} \\ \mathbf{=}\mathbf{\$}\mathbf{4}\mathbf{,}\mathbf{550}-\mathbf{\$}\mathbf{3}\mathbf{,}\mathbf{900} \\ \mathbf{=}\mathbf{\$}\mathbf{650} \end{gathered}$$