Question

Problem 3-4A Interpreting unadjusted and adjusted trial balances, and preparing financial statements LO P1, P2, P3

A six-column table for JKL Company follows. The first two columns contain the unadjusted trial balance for the company as of July 31, 2017. The last two columns contain the adjusted trial balance as of the same date. Unad usted Trial Balance $187.240 11,089 17,200 9.648 88,888 $24.888 10,180 Cash Accounts receivable Office supplies Prepaid insurance Office equipment Accum. Depreciation-office equip. Accounts payable Interest payable Salaries payable Unearned consulting Fees Long-term totes payable Common stock Retained earnings Dividends Consulting fees earned Depreciation expense-Office equip. Salaries expense Interest expense Insurance expense Rent expense Office supplies expense Advertising expense Totals 28.000 se.ee 28.800 19,200 Ad fusted Trial Balance $ 107,240 23,500 6, 580 3,760 Beece $28.000 2e, 280 3.500 13.999 18, ese se.ee 28,888 19,200 6,58€ 189,568 4.888 88,378 4.770 5.888 14,628 10.780 22. 160 $ 370,000 $379,800 6,58€ 167,600 67,378 1.270 9 14,620 12.268 $ 327,168 $327.16 Problem 3-4A Part 1 Required: 1. Analyze the differences between the unadjusted and adjusted trial balances to determine the adjustments that likely were made. Show the results of your analysis by entering these adjustment amounts in the cells provided. Adjustments Unadjusted Trial Balance $ 107240 11.0001 17.2001 9.640 80.000 $ 24,000 10.1001 Adjusted Trial Balance $ 107 240 23.500 6.500 3.780 80.000 $ 28,000 20.000 1 Account Cash Accounts receivable Office supplies Prepaid insurance Office equipment Accumulated depreciation-Office equipment Accounts payable Interest payable Salaries payable Unearned consulting fees Long-term notes payable Common stock Retained earnings Dividends Consulting fees earned Consulting fees earned (Unearned fees adjusted) Depreciation expense-Office equipment Salaries expense Interest expense Insurance expense T Rent expense Office supplies expense Advertising expense Totals 0 28,000 50.0001 28.800 19.2001 13,000 18,000 50,000 28.800 19.200 6,500 6.500 167.000 189.500 0 4.000 80.370 67,370 1.270 o 14.620 0 12.280 327,100 5.880 14.620 10.700 22.180 370,000 $ $ 327.100 $ $ 370,000

Answer 1

Solution

JKL Company

1. Adjustments made:

Account	Unadjusted Trial Balance		Adjustments		Adjusted Trial Balance
	Debit	Credit	Debit	Credit	Debit	Credit
Cash	$107,240				$107,240
Accounts Receivable	$11,000		$12,500		$23,500
Office Supplies	$17,200			$10,700	$6,500
Prepaid Insurance	$9,640			$5,880	$3,760
Office Equipment	$80,000				$80,000
Accumulated Depreciation - Office Equipment		$24,000		$4,000		$28,000
Accounts Payable		$10,100		$9,900		$20,000
Interest Payable		0		$3,500		$3,500
Salaries Payable				$13,000		$13,000
Unearned Consulting Fees		$28,000	$10,000			$18,000
Long-Term Notes Payable		$50,000				$50,000
Common Stock		$28,800				$28,800
Retained Earnings		$19,200				$19,200
Dividends	$6,500				$6,500
Consulting Fees Earned		$167,000		$22,500		$189,500
Depreciation Expense - Office Equipment	0				$4,000
Salaries Expense	$67,370				$80,370
Interest Expense	$1,270				$4,770
Insurance Expense	0				$5,880
Rent Expense	$14,620				$14,620
Office Supplies Account	$0				$10,700
Advertising Expense	$12,260				$22,160
Totals	$327,100	$327,100	$22,500	$69,480	$370,000	$370,000

Explanations:

Accounts receivable debited with accrued revenue, $12,500 (consulting fees earned (189,500 – 167,000) – earned portion of unearned fees (28,000 – 18,000) = $12,500

Accounts receivable balance difference = 23,500 – 11,000 = $12,500

Office Supplies expense (Cost of supplies used) = 17,200 – 6,500 = $10,700

Insurance expense = 9,640 – 3,760 = $5,880

Depreciation expense – Accumulated depreciation difference amount = 28,000 – 24,000 = $4,000

Increase in accounts payable is due to unpaid advertising expense –

Increase in accounts payable = 20,000 – 10,100 = $9,900

Unpaid advertising expense = 22,160 – 12,260 = $9,900

Increase in salaries expense is due to unpaid salaries = $13,000

Increase in interest expense is due to interest payable = $3,500