Question

Pitman Company is a small editorial services company owned and operated by Jan Pitman. On October 31, 2019 the end of the current year, Pitman Company’s accounting clerk prepared the following unadjusted trial balance:

Pitman Company

UNADJUSTED TRIAL BALANCE

October 31, 2019

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash	7,655.00
2	Accounts Receivable	38,345.00
3	Prepaid Insurance	7,075.00
4	Supplies	2,290.00
5	Land	113,500.00
6	Building	149,450.00
7	Accumulated Depreciation-Building		87,905.00
8	Equipment	133,250.00
9	Accumulated Depreciation-Equipment		96,435.00
10	Accounts Payable		11,860.00
11	Unearned Rent		6,705.00
12	Jan Pitman, Capital		220,820.00
13	Jan Pitman, Drawing	14,690.00
14	Fees Earned		328,600.00
15	Salaries and Wages Expense	198,220.00
16	Utilities Expense	42,120.00
17	Advertising Expense	22,315.00
18	Repairs Expense	17,210.00
19	Miscellaneous Expense	6,205.00
20	Totals	752,325.00	752,325.00

The data needed to determine year-end adjustments are as follows:

a.	Unexpired insurance at October 31, $5,860.
b.	Supplies on hand at October 31, $545.
c.	Depreciation of building for the year, $7,985.
d.	Depreciation of equipment for the year, $4,080.
e.	Unearned rent at October 31, $1,145.
f.	Accrued salaries and wages at October 31, $3,490.
g.	Fees earned but unbilled on October 31, $11,640.

	Required:
1.	Journalize the adjusting entries using the following additional accounts: Salaries and Wages Payable, Rent Revenue, Insurance Expense, Depreciation Expense—Building, Depreciation Expense—Equipment and Supplies Expense. Refer to the Chart of Accounts for exact wording of account titles.
2.	Determine the balances of the accounts affected by the adjusting entries and prepare an adjusted trial balance.

Chart of Accounts

CHART OF ACCOUNTS
Pitman Company
General Ledger
ASSETS 11 Cash 12 Accounts Receivable 13 Prepaid Insurance 14 Supplies 15 Land 16 Building 17 Accumulated Depreciation-Building 18 Equipment 19 Accumulated Depreciation-Equipment LIABILITIES 21 Accounts Payable 22 Unearned Rent 23 Salaries and Wages Payable EQUITY 31 Jan Pitman, Capital 32 Jan Pitman, Drawing	REVENUE 41 Fees Earned 42 Rent Revenue EXPENSES 51 Salaries and Wages Expense 52 Utilities Expense 53 Advertising Expense 54 Repairs Expense 55 Depreciation Expense-Building 56 Depreciation Expense-Equipment 57 Insurance Expense 58 Supplies Expense 59 Miscellaneous Expense

1. Journalize the adjusting entries using the following additional accounts: Salaries and Wages Payable, Rent Revenue, Insurance Expense, Depreciation Expense—Building, Depreciation Expense—Equipment and Supplies Expense. Refer to the Chart of Accounts for exact wording of account titles.

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1		Adjusting Entries
2
3
4
5
6
7
8
9
10
11
12
13
14
15

2. Determine the balances of the accounts affected by the adjusting entries and prepare an adjusted trial balance.

Pitman Company

ADJUSTED TRIAL BALANCE

October 31, 2019

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash
2	Accounts Receivable
3	Prepaid Insurance
4	Supplies
5	Land
6	Building
7	Accumulated Depreciation-Building
8	Equipment
9	Accumulated Depreciation-Equipment
10	Accounts Payable
11	Unearned Rent
12	Salaries and Wages Payable
13	Jan Pitman, Capital
14	Jan Pitman, Drawing
15	Fees Earned
16	Rent Revenue
17	Salaries and Wages Expense
18	Utilities Expense
19	Advertising Expense
20	Repairs Expense
21	Depreciation Expense-Building
22	Depreciation Expense-Equipment
23	Insurance Expense
24	Supplies Expense
25	Miscellaneous Expense
26	Totals

Answer 1

1
Date	Account Titles and Explanation	Debit	Credit
Oct 31	Insurance Expense	5,860
	Prepaid Insurance		5,860
Oct 31	Supplies Expense	1,745
	Supplies		1,745
Oct 31	Depreciation Expense	7,985
	Accumulated Depreciation - Building		7,985
Oct 31	Depreciation Expense	4,080
	Accumulated Depreciation - Equipment		4,080
Oct 31	Unearned Rent	5,560
	Rent Revenue		5,560
Oct 31	Salaries and Wages Expense	3,490
	Salaries and Wages Payable		3,490
Oct 31	Accounts Receivable	11,640
	Fees Earned		11,640
2		Trial Balance		Adjustments		Adjusted Trial Balance
	Account Title	Debit	Credit	Debit	Credit	Debit	Credit
	Cash	7,655				7,655
	Accounts Receivable	38,345		11,640		49,985
	Prepaid Insurance	7,075			5,860	1,215
	Supplies	2,290			1,745	545
	Land	113,500				113,500
	Building	149,450				149,450
	Accumulated Depreciation - Building		87,905		7,985		95,890
	Equipment	133,250				133,250
	Accumulated Depreciation - Equipment		96,435		4,080		100,515
	Accounts Payable		11,860				11,860
	Unearned Rent		6,705	5,560			1,145
	Salaries and Wages Payable				3,490		3,490
	Jan Pitman, Capital		220,820				220,820
	Jan Pitman, Drawing	14,690				14,690
	Fees Earned		328,600		11,640		340,240
	Rent Revenue				5,560		5,560
	Salaries and Wages Expense	198,220		3,490		201,710
	Utilities Expense	42,120				42,120
	Advertising Expense	22,315				22,315
	Repairs Expense	17,210				17,210
	Depreciation Expense-Building			7,985		7,985
	Depreciation Expense-Equipment			4,080		4,080
	Insurance Expense			5,860		5,860
	Supplies Expense			1,745		1,745
	Miscellaneous Expense	6,205				6,205
	Totals	752,325	752,325	40,360	40,360	779,520	779,520