Question

Section C: Long Exercises (20 Marks) C. The trial balance of Smith Company at December 31, 2019 is shown below. ISK2: 10 marks) Smith Company Trial Balance December 31, 2019 Debit 75,000 Credit Accounts Cash 165.000 $2,500 1.800,000 337,500 300,000 Prepaid Insurance Supplies Equipment Accumulated Depreciation - Equipment Notes Payable Accounts Payable Smith, Capital Smith, Drawings Service Revenue Utilities Expense Total 180,000 1.147.500 180.000 367,500 30,000 2,332,500 2,332,500 Other information: 1. Depreciation of equipment for December was $30,000, 2. Rent owed for the month of December but will not be paid until January, 2020 was S45.000. 3. The amount of insurance that expired in the month of December was $15,000. 4. Salaries owed for the month of December but will not be paid until January, 2020 was $60,000. 5. A physical count of supplies indicates $22,500 on hand at December 31 Required: a. Prepare the adjusting entries required on December 31, 2019. (5 marks) b. Prepare the adjusted trial balance on December 31, 2019. (5 marks)

Answer 1

a.

1.Depreciation Account Dr 30000

To Accumulated Depreciation - Equipment 30000

2.Rent Account Dr 45000

To Rent Payable 45000

3.Insurance Account Dr 15000

To Prepaid Insurance 15000

4.Salary Account Dr 60000

To Salary Payable 60000

5.Supplies Expense Account Dr 60000

To supplies 60000

Since supplies on hand is 22500 so 82500 - 22500 = 60000 will be expense out.

2.Adjusted Trial Balance

Particulars	Debit	Credit
Cash	75000
Prepaid Insurance	150000
Supplies	22500
Equipment	1800000
Accumulated Depreciation		367500
Notes Payable		300000
Accounts Payable		180000
Capital Smith		1147500
Smith Drawings	180000
Services Revenue		367500
Utility Expense	30000
Depreciation	30000
Rent Expense	45000
Rent Payable		45000
Insurance Expense	15000
Salary Expense	60000
Salary Payable		60000
Supplies Expense	60000
Total	2467500	2467500

Rent payable(45000) and salary payable (60000) can be merged with utilities payable