Question

P3-46 Preparing adjusting entries and preparing an adjusted trial balance

This problem continues the Canyon Canoe Company situation from Chapter 2. You will need to use the unadjusted trial balance and posted T-accounts that you prepared in Chapter 2.

At December 31, the business gathers the following information for the adjusting entries:

1. Office supplies on hand, $165

2. Rent of one month has been used. (Hint: See Dec. 1 transaction from Chapter 2)

3. Determine the depreciation on the building using straight-line depreciation. Assume the useful life of the building is five years and the residual value is $5,000. (Hint: The building was purchased on December 1.)

4. $400 of unearned revenue has now been earned.

5. The employee who has been working the rental booth has earned $1,250 in wages

   that will be paid January 15, 2019.

6. Canyon Canoes has earned $1,850 of canoe rental revenue that has not been recorded or received.

7. Determine the depreciation on the canoes purchased on November 3 using straight-line depreciation. Assume the useful life of the canoes is 4 years and the residual value is $0.

8. Determine the depreciation on the canoes purchased on December 2 using straight-line depreciation. Assume the useful life of the canoes is 4 years and the residual value is $0.

9. Interest expense accrued on the notes payable, $50.

   Requirements

   1. JournalizeandposttheadjustingentriesusingtheT-accounts that you completed in Chapter 2. In the T-accounts, denote each adjusting amount as Adj. and an account balance as Balance.

   2. Prepare an adjusted trial balance as of December 31, 2018.

Answer 1

C D w Debit ($) Credit ($) 1085 | 10851 4 1200 Ova 1200 2500) 2500 11 400) 400 А 1 1) 2 Date Particulars 3 31-Dec Supplies expense (1250-165) Supplied (to record supplied consumed during the year) 6 31-Dec Rent Expense 7 Prepaid rent (To record expired insurance) 31-Dec Depreciation expense - building 10 Accumulated depreciation - building (To record depreciation expense) 12 31-Dec Unearned revenue (750-450) 13 Canoes Rental revenue 14 (To record revenue earned during the year) 15 31-Dec wages expense 16 Wages payable 17 (To record accrued salaries & wages) 18 31-Dec| Accounts receivable 19 Canoes Rental revenue (To record revenue earned during the year) 21 31-Dec Depreciation expense - canoes 22 Accumulated depreciation - canoes 23 (To record depreciation expense) 24 31-Dec Depreciation expense - canoes 25 Accumulated depreciation - canoers 26 (To record depreciation expense) 27 31-Dec Interest expense 28 Interest payable 29 (To record accrued interest expense) 1250 1250|| 1850 1850 20 800 800 6001 600 50 50

C D E F G H 30 31 Cash bal. 12125 32 33 34 bal. adj. Accounts receivable 57501 1850 7600 1 12125 35 36 37 38 Prepaid rent bal. 4200 Canoes 12000 1200 adj. bal. 3000 12000 Accounts payable 3050 bal. Office supplies 1250 1085 adj. bal. 40 41 42 43 44 45 30501 165 46 47 Canoes rental revenue 12400 bal. 2250 adj. 14650 bal. adj. Wages 3300 1250 4550 49 50 Dividend bal. 450 Utilities expense 445 bal. 51 52 53 54 55 450 445 56 Utilities payable 295 bal. Telephone payable 325 bal. 57 58 295 325

telephone expense bal. 500 Land 85000 bal. 60 61 62 63 64 65 66 L 500| 85000|| Building bal. 35000 Notes payable 7200 bal. 68 69 350001 70 71 72 73 74 Unearned revenue adj. 400 750 bal. 350

78 79 80 81 82 87 88 89 90 Adjusted trail Balance Particulares Cash Accounts receivable Prepaid rent Office supplies Land Canoes Accumulated depreciation-canoes Building Accumulated depreciation-building Accounts payable Notes payable Unearned revenue Wages payable Interest payable Utilities payable Telephone payable Common stock Canoes rental revenue Dividends Wages payable Utilities expense Telephone expense Supplies expense Rent expense Depreciation expense - building Depreciation expense - canoes Interest expense Total Debit ($) Credit ($) 12125 7600 3000 165 85000 12000 1400 35000 2500 3050 7200 350 1250 50 295 325 136000 14650 450 4550 445 500 1085 1200 95 96 97 98 99 100 2500 101 102 103 104 105 106 1400 50 167070 167070