Question

Option #2: Preparing Adjusting Entries, Closing Entries and a Post-Closing Trial Balance

Complete Part 1 and Part 2.

Part 1

Shown below is Johnson Travel Agency’s adjusted trial balance as of the end of its annual accounting period:

Johnson Travel Agency’s Adjusted Trial Balance December 31
Account Name	DR.	CR.
Cash	$ 52,000
Accounts receivable	18,900
Office equipment	31,500
Accumulated depreciation—Office equipment		$7,500
Notes payable		11,260
Capital stock		42,500
Dividends	2,500
Fees earned		98,000
Salaries expense	45,200
Rent expense	2,300
Depreciation expense—Office equipment	3,160
Office supplies expense	3,700
Totals	$159,260	$159,260

(a) Prepare the necessary closing entries.

(b) Using the spreadsheet template provided, prepare a post-closing trial balance.

Part 2

Determine if the following transactions for Everon Corporation require an adjustment. If an adjusting entry is required, give the correct entry. Where applicable, write the original entry first and then the adjusting entry.

1. At the beginning of the month, Everon agreed to perform services for the next four months for Maston, Inc. for $25,000 per month. Ford paid Michigan $100,000 cash in advance. One month has now passed.
2. Everon pays its employees every two weeks. At the end of the month, Everon owes its employees $75,000 but will not pay them until the following week.
3. Everon paid $60,000 cash for rent at the beginning of the month by debiting prepaid rent and crediting cash. This amount covered six months of occupancy, but only one month has passed.
4. At the beginning of the year, Everon bought supplies from Douglas Implements for $4,500 cash per month for twelve months. A physical count at year-end revealed supplies worth $1,500 were still left over. Complete the original journal entry followed by the adjusting entry.

Answer 1