Question

Exercise 3-19A Preparing a trial balance LO 3-3 Required On December 31, Year 2, Morgan Company had the following normal account balances in its general ledger. Use this information to prepare a trial balance. Land Unearned revenue Dividends Prepaid rent Cash Salaries expense Accounts payable Common stock Operating expense Office supplies Advertising expense Retained earnings, Beginning Service revenue Accounts receivable $ 30,000 32,000 8,000 ,600 90,000 18,000 7,000 80,000 41,000 2,500 3,500 9,000 86,000 15,400

Answer 1

Credit Morgan Company Trial Balance December 31, Year 2 Account Titles Debit Cash $ 90,000 Accounts receivable $ 15,400 Office supplies $ 2,500 Prepaid rent $ 5,600 Land $ 30,000 Accounts payable $ Unearned revenue $ Common stock $ Retained earnings, beginning $ Dividends $ 8,000 Service revenue $ Operating expense $ 41,000 Advertising expense $ 3,500 Operating expenses Salaries expense $ 18,000 Total $ 214,000 $ 7,000 32,000 80,000 9,000 86,000 214,000

• Unearned revenue is a liability. It is the money received in advance from the customers before providing the services. Once the services are provided, the revenue is recognized.
• Prepaid rent is rent paid in advance. Once the related period is elapsed, the expense is recognized by writing off prepaid rent.