Question

P3-18 Lira Lopez started her own consulting frm, Lira Consulting, SA on May 1, 2017. Prepare adjusting entries, The trial balance at May 31 is as follows. post to ledger accounts, ans prepare an adjusted trial balance. LIRA CONSULTING, SA Trial Balance May 31, 2017 (LO 5, 6, 7) Account Number Debit Credit RS 7,700 4,000 1,500 2,880 12,000 Cash Accounts Receivable 112 126 130 157 201 209 311 400 726 729 Ll Prepaid Insurance Equipment Accounts Payable Share Capital-Ordinary Salaries and Wages Expense Unearned Service Revenue Service Revenue Rent Expense R$ 4,700 2,600 16,000 8,780 3,000 1,000 R$32,080 R$32,080 In addition to those accounts listed on the trial balance, the chart of accounts for Lira Con- sulting also contains the following accounts and account numbers: No. 158 Accumulated Depreciation-Equipment, No. 212 Salaries and Wages Payable, No. 631 Supplies Expense, ntian Rynense. No. 722 Insurance Expense, and No. 732 Utilities Expense Other data: 1. R$500 of supplies have been used during the month. 2. Utilities expense incurred but not paid on May 31, 2017, R$200. 3. The insurance policy is for 2 years. 4. R$1,000 of the balance in the Unearned Service Revenue account remains unearned at the end of the month. 5. May 31 is a Tuesday, and employees are paid on Fridays. Lira Consulting has two employees, who are paid R$500 each for a 5-day work week. 6. The equipment has a 5-year life with no residual value. It is being depreciated at R$200 per month for 60 months. 7. Invoices representing R$1,100 of services performed during the month have not been recorded as of May 31. Instructions (a) Prepare the adjusting entries for the month of May. Use J4 as the page number for your journal. (b) Enter the totals from the trial balance as beginning account balances and place a check Adj, trial balance mark in the posting reference column. Post the adjusting entries to the ledger accounts. (c Prenare an adiusted trial balance at May 31, 2017

Answer 1

(a) Adjusting entries

	Date	Particulars	L.F	Amount ($)	Amount ($)
1	May-31	Supplies Expense		500
		Supplies			500
		(For supplies used)
2	May-31	Utilities Expense		200
		Utilities Payable			200
		(For utilities exp incurred)
3	May-31	Insurance Expense (2,880/24)		120
		Prepaid insurance			120
		(for one month insurance expired)
4	May-31	Unearned Service Revenue		1,600
		Service Revenue			1,600
		(For unearned revenue expired)
5	May-31	Salaries Expense (1,000*2/5)		400
		Salaries payable			400
		(For salaries exp incurred)
6	May-31	Depreciation exp		200
		Accumulated dep			200
		(For equipment depreciated)
7	May-31	Accounts Receivable		1,100
		Service Revenue			1,100
		(For revenue not recorded)

(b) Ledger accounts

Cash
Particulars	Amount	Particulars	Amount
Opening Balance	7,700
Closing Balance	7,700
Account Receivable
Particulars	Amount	Particulars	Amount
Opening Balance	4,000
7	1,100
Closing Balance	5,100
Supplies
Particulars	Amount	Particulars	Amount
Opening Balance	1,500	1	500
	1,500		500
Closing Balance	1,000
Prepaid Insurance
Particulars	Amount	Particulars	Amount
Opening Balance	2,880	3	120
	2,880		120
Closing Balance	2,760
Equipment
Particulars	Amount	Particulars	Amount
Opening Balance	12,000
Closing Balance	12,000
Accounts Payable
Particulars	Amount	Particulars	Amount
		Opening Balance	4,700
		Closing Balance	4,700
Unearned Service Revenue
Particulars	Amount	Particulars	Amount
4	1,600	Opening Balance	2,600
	1,600		2,600
		Closing Balance	1,000
Share Capital-Ordinary
Particulars	Amount	Particulars	Amount
		Opening Balance	16,000
		Closing Balance	16,000
Service Revenue
Particulars	Amount	Particulars	Amount
		Opening Balance	8,780
		4	1,600
		7	1,100
		Closing Balance	11,480
Salaries and Wages Expense
Particulars	Amount	Particulars	Amount
Opening Balance	3,000
5	400
Closing Balance	3,400
Rent Expense
Particulars	Amount	Particulars	Amount
Opening Balance	1,000
Closing Balance	1,000
Supplies Expense
Particulars	Amount	Particulars	Amount
Opening Balance	0
1	500
Closing Balance	500
Utilities Expense
Particulars	Amount	Particulars	Amount
Opening Balance	0
2	200
Closing Balance	200
Utilities payable
Particulars	Amount	Particulars	Amount
		Opening Balance	0
		2	200
		Closing Balance	200
Salaries Payable
Particulars	Amount	Particulars	Amount
		Opening Balance	0
		5	400
		Closing Balance	400
Depreciation exp
Particulars	Amount	Particulars	Amount
Opening Balance	0
6	200
Closing Balance	200
Accumulated dep
Particulars	Amount	Particulars	Amount
		Opening Balance	0
		6	200
		Closing Balance	200
Insurance Expense
Particulars	Amount	Particulars	Amount
Opening Balance	0
3	120
Closing Balance	120

(c) Adjusted Trial Balance

LIRA Consulting, SA
Adjusted Trial Balance
May 31, 2017
	Debit	Credit
Cash	7,700
Account Receivable	5,100
Supplies	1,000
Prepaid insurance	2,760
Equipment	12,000
Accumulated dep- Equipment		200
Accounts Payable		4,700
Unearned Service Revenue		1,000
Salaries payable		400
Utilities payable		200
Share Capital-Ordinary		16,000
Service Revenue		11,480
Salaries and Wages Expense	3,400
Rent Expense	1,000
Supplies Expense	500
Utilities Expense	200
Depreciation exp	200
Insurance Exp	120
Total	33,980	33,980