Question

The trial balances shown below are before and after adjustment for Pharoah Company at the end of its fiscal year.

PHAROAH COMPANY Trial Balance August 31, 2017
		Before Adjustment				After Adjustment
		Dr.		Cr.		Dr.		Cr.
Cash		$10,680				$10,680
Accounts Receivable		8,770				9,360
Supplies		2,990				1,910
Prepaid Insurance		4,210				2,960
Equipment		16,710				16,710
Accumulated Depreciation—Equipment				$3,760				$4,960
Accounts Payable				5,080				5,080
Salaries and Wages Payable				0				1,850
Unearned Rent Revenue				1,910				1,160
Common Stock				19,980				19,980
Retained Earnings				5,330				5,330
Dividends		2,800				2,800
Service Revenue				34,000				34,590
Rent Revenue				12,180				12,930
Salaries and Wages Expense		16,130				17,980
Supplies Expense		0				1,080
Rent Expense		19,950				19,950
Insurance Expense		0				1,250
Depreciation Expense		0				1,200
		$82,240		$82,240		$85,880		$85,880

Prepare the adjusting entries that were made.

Answer 1

Solution

Pharoah Company

Adjusting Entries:

Date	Account Titles and Explanation	Debit	Credit
August 31, 2017	Accounts Receivable	$590
	Sales Revenue		$590
	(To record unbilled credit sales; 9,360 - 8,770 = 590)
August 31, 2017	Supplies Expense	$1,080
	Supplies		$1,080
	(To record cost of supplies used, 2,990 - 1,910 = 1,080)
August 31, 2017	Insurance Expense	$1,250
	Prepaid Insurance		$1,250
	(To record expired portion of prepaid insurance, 4,210 - 2,960 = 1,250)
August 31, 2017	Depreciation Expense - Equipment	$1,200
	Accumulated Depreciation - Equipment		$1,200
	(To record current year depreciation, 4,960 - 3,760 = 1,200)
August 31, 2017	Salaries and Wages Expense	$1,850
	Salaries and Wages Payable		$1,850
	(To record unpaid salaries)
August 31, 2017	Unearned Rent Revenue	$750
	Rent Revenue		$750
	(To record earned portion of unearned rent revenue, 1,910 - 1,160 = 750)