Question

North Star prepared the following unadjusted trial balance at the end of its second year of operations ending December 31.

Account Titles	Debit				Credit
Cash	$	12,200
Accounts Receivable		6,200
Prepaid Rent		2,440
Equipment		21,200
Accumulated Depreciation					$	1,020
Accounts Payable						1,020
Income Tax Payable						0
Common Stock						25,000
Retained Earnings						2,300
Sales Revenue						50,600
Salaries and Wages Expense		25,200
Utilities Expense		12,700
Rent Expense		0
Depreciation Expense		0
Income Tax Expense		0
Totals	$	79,940			$	79,940

Other data not yet recorded at December 31:

1. Rent expired during the year, $1,220.
2. Depreciation expense for the year, $1,020.
3. Utilities used and unpaid, $9,200.
4. Income tax expense, $410.

3. Summarize the adjusting journal entries in T-accounts. After entering the beginning balances and computing the adjusted ending balances, prepare an adjusted trial balance as of December 31.

Answer 1

	Summarize the adjusting journal entries in T-accounts
	Date	Particulars	Amount Debit($)	Amount Credit($)
a	31st December	Rent Expense A/c Dr	1,220
		To Prepaid Rent		1,200
		(rent expense expired so reversed)
b	31st December	Depreciation Expense A/c Dr	1,020
		To Accumulated Depreciation		1,020
		(being Depreciation charged for the year)
c	31st December	Utilities Expense A/c Dr	9,200
		To Utilities Payable a/c		9,200
		(being utilities charged and payable)
d	31st December	Income tax expense a/c Dr	410
		To income Tax payable a/c		410
		(income tax payable during the year)

Computation of adjusted closing ledgers balance

Rent Expenses A/c
Date	Particulars	Amount Debit	Date	Particulars	Amount Credit
	beginning Balance	0
31st Dec	To Prepaid Expenses	1220	31st Dec	By Closing Balance	1220
				(transfer to P&l a/c)
		1220			1220
Prepaid Rent A/c
Date	Particulars	Amount Debit	Date	Particulars	Amount Credit
	beginning Balance	2440	31st Dec	By Rent Expense	1220
			31st Dec	By Closing Balance	1220
		1220			1220
Depreciation Expense A/c Dr
Date	Particulars	Amount Debit	Date	Particulars	Amount Credit
	beginning Balance	0	31st Dec	By Closing Balance	1020
	Accumulated Depreciation	1020		(transfer to P&l a/c)
		1020			1020
Accumulated Depreciation A/c
Date	Particulars	Amount Debit	Date	Particulars	Amount Credit
				Beginning balance	1020
31st Dec	Closing balance	2040	31st Dec	Depreciation charged	1020
		2040			2040
Utilities Expense A/c Dr
Date	Particulars	Amount Debit	Date	Particulars	Amount Credit
	beginning balance	12700		By Closing Balance	21900
31st Dec	Utility payable	9200		(transfer to P&l a/c)
		21900			21900
Utilities Payable A/c
Date	Particulars	Amount Debit	Date	Particulars	Amount Credit
				beginning balance	0
31st Dec	Closing balance	9200	31st Dec	Utilities Expense	9200
		9200			9200
Income tax expense a/c Dr
Date	Particulars	Amount Debit	Date	Particulars	Amount Credit
	beginning balance	0	31st Dec	By Closing Balance	410
31st Dec	Income tax payable	410		(transfer to P&l a/c)
		410			410
Income tax Payable a/c
Date	Particulars	Amount Debit	Date	Particulars	Amount Credit
				beginning balance	0
31st Dec	By Closing Balance	410	31st Dec	Income tax	410
		410			410

North Star
Adjusted Trial Balance as on 31st December
Particular	Amount Debit($)	Amount Credit ($)
Cash	12,200
Accounts Receivable	6,200
Prepaid Rent	1,220
Equipment	21,200
Accumulated Depreciation		2,040
Accounts payable		1,020
Utilities Payable		9,200
Income Tax payable		410
Common Stock		25,000
Retained Earning		2,300
Sales Revenue		50,600
Salaries and wages expenses	25,200
Utilities Expenses	21,900
Rent Expenses	1,220
Depreciation Expenses	1,020
Income Tax expenses	410
Totals	90,570	90,570