Question

The unadjusted trial balance as of December 31, 2021, for the Bagley Consulting Company appears below. December 31 is the company’s reporting year-end.

Account Title	Debits		Credits
Cash	2,250
Accounts receivable	8,250
Prepaid insurance	3,400
Land	225,000
Buildings	65,000
Accumulated depreciation—buildings			26,000
Office equipment	99,000
Accumulated depreciation—office equipment			39,600
Accounts payable			29,550
Salaries payable			0
Deferred rent revenue			0
Common stock			240,000
Retained earnings			47,850
Service revenue			85,000
Interest revenue			4,600
Rent revenue			5,700
Salaries expense	34,000
Depreciation expense	0
Insurance expense	0
Utilities expense	22,200
Maintenance expense	19,200
Totals	478,300		478,300

Information necessary to prepare the year-end adjusting entries appears below.

1. The buildings have an estimated useful life of 50 years with no salvage value. The company uses the straight-line depreciation method.
2. The office equipment is depreciated at 10 percent of original cost per year.
3. Prepaid insurance expired during the year, $1,700.
4. Accrued salaries at year-end, $1,350.
5. Deferred rent revenue at year-end should be $900.

Required:
1. From the trial balance and information given, prepare adjusting entries.
2. Post the beginning balances and adjusting entries into the appropriate T-accounts.
3. Prepare an adjusted trial balance.
4. Prepare closing entries.
5. Prepare a post-closing trial balance.

Answer 1

Bagley Consulting Company Adjusting entries Date Account i Depreciation expense Accumulated Depreciation - Buildings Credit Debit $ 1,300 Calculation =65,000/50 yrs $ 1,300 $ 9,900 =99,000*10% Depreciation expense Accumulated Depreciation - Office Equipment $ 9,900 3 $ 1,700 Insurance expense Prepaid Insurance $ 1,700 4 $ 1,350 Salaries and wages expense Salaries and wages payable $ 1,350 $ 900 5 Rent Revenue Deferred rent revenue $ 900

Closing entries CJE 1 Service Revenue Interest Revenue Rent Revenue Income Summary $ 85,000 $ 4,600 $ 4,800 $ 94,400 $ 89,650 CJE 2 Income Summary Salaries expense Depreciation expense Insurance expense Utilities expense Maintenance expense $ 35,350 $ 11,200 $ 1,700 $ 22,200 $ 19,200 $ 4,750 CJE 3 Income Summary Retained Earnings $ 4,750

Bagley Consulting Company T Accounts Date Debit Date Cash Op bal $ 2,250 Credit Date Date Credit Date Debit Date Credit Debit Date Credit Accounts Receivable $ 8,250 Debit Date Prepaid Insurance $3,400 3 Op bal Op bal $ 1,700 Bal. Bal. Bal. $ 2,250 Land $225,000 $ 8,250 Building $ 65,000 $ 1,700 Accum. Depr.- Building Op bal $ 26,000 Op bal 1 1 $ 1,300 Op bal Office Equipment $ 99,000 Op bal Bal. Bal. $ 27,300 Bal. $225,000 Accum. Depr. - Office Equip Op bal $ 39,600 2 $ 9,900 $ 65,000 Accounts Payable Op bal Bal. Salaries payable Op bal 4 $ 99,000 Deferred rent revenue Op bal $ $ $29,550 $ $1,350 . 900 $ 49,500 $ 29,550 Bal. $ 1,350 $ 900 Bal. Common Stock Op bal Bal. Retained Earnings Op bal $ 240,000 $ 47,850 $ 240,000 $ 47,850 Bal. Service Revenue Op bal Bal. Interest Revenue Op bal $ 85,000 $4,600 Rent Revenue Op bal $ 900 $ 5,700 Op bal 4 Salaries expense $ 34,000 $ 1,350 5 $ 4,600 $ 4,800 Bal. Bal. Insurance expense Bal. $ 85,000 Depreciation expense $ - $ 1,300 $ 9,900 Bal. Utilities expense $ 22,200 $ 35,350 Maintenance expense $ 19,200 Op bal Op bal 1 2 Op bal Op bal 3 $ 1,700 Bal. $ 11,200 $ 1,700 Bal. $ 22,200 $ 19,200

Bagley Consulting Company Account Names Cash Accounts Receivable Prepaid Insurance Land Buildings Accumulated Depreciation - Buildings Office Equipment Accumulated Depreciation - Office Equipment Accounts Payable Salaries payable Deferred rent revenue Common Stock Retained Earnings Service Revenue Interest Revenue Rent Revenue Salaries expense Depreciation expense Insurance expense Utilities expense Maintenance expense Totals Adjusted TB Debit Credit 2,250 8,250 1,700 225,000 65,000 27,300 99,000 49,500 29,550 1,350 900 240,000 47,850 85,000 4,600 4,800 35,350 11,200 1,700 22,200 19,200 490,850 490,850 Post Closing TB Debit Credit 2,250 8,250 1,700 225,000 65,000 27,300 99,000 49,500 29,550 1,350 900 240,000 52,600 401,200 401,200