Question

Pitman Company is a small editorial services company owned and operated by Jan Pitman. On October 31, 2019 the end of the current year, Pitman Company’s accounting clerk prepared the following unadjusted trial balance:

Pitman Company

UNADJUSTED TRIAL BALANCE

October 31, 2019

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash	7,135.00
2	Accounts Receivable	37,950.00
3	Prepaid Insurance	7,045.00
4	Supplies	1,895.00
5	Land	116,150.00
6	Building	148,750.00
7	Accumulated Depreciation-Building		88,280.00
8	Equipment	133,800.00
9	Accumulated Depreciation-Equipment		97,280.00
10	Accounts Payable		12,145.00
11	Unearned Rent		6,970.00
12	Jan Pitman, Capital		222,685.00
13	Jan Pitman, Drawing	15,300.00
14	Fees Earned		320,650.00
15	Salaries and Wages Expense	190,770.00
16	Utilities Expense	42,730.00
17	Advertising Expense	22,595.00
18	Repairs Expense	17,420.00
19	Miscellaneous Expense	6,470.00
20	Totals	748,010.00	748,010.00

The data needed to determine year-end adjustments are as follows:

a.	Unexpired insurance at October 31, $6,080.
b.	Supplies on hand at October 31, $470.
c.	Depreciation of building for the year, $7,245.
d.	Depreciation of equipment for the year, $4,140.
e.	Unearned rent at October 31, $1,200.
f.	Accrued salaries and wages at October 31, $3,550.
g.	Fees earned but unbilled on October 31, $11,125.

	Required:
1.	Journalize the adjusting entries using the following additional accounts: Salaries and Wages Payable, Rent Revenue, Insurance Expense, Depreciation Expense—Building, Depreciation Expense—Equipment and Supplies Expense. Refer to the Chart of Accounts for exact wording of account titles.
2.	Determine the balances of the accounts affected by the adjusting entries and prepare an adjusted trial balance.

Answer 1

Journal
Date	Description	Debit	Credit
1	Insurance	$                   965
	To Prepaid Insurance		$                       965
	(Insurance charges transferred to expense A/c)
2	Supplies Expense	$               1,425
	To Supplies		$                   1,425
	(Supplies expense transferred from Supplies)
3	Depreciation Expense - Building	$               7,245
	To Accumulated depreciation		$                   7,245
	(Depreciation for building)
4	Depreciation - Equipment	$               4,140
	To Accumulated depreciation		$                   4,140
	(Depreciation for Equipemnt)
5	Unearned Rent	$               5,770
	To Rent Revenue		$                   5,770
	(Rent revenue transferred from unearned rent)
6	Salaries & Wages	$               3,550
	To Salaries & Wages Payable		$                   3,550
	(Salaries accrued at the end of the year)
7	Fee Receivable	$             11,125
	To Fee Earned		$                 11,125
	(Fee Earned but not Billed)

ADJUSTED TRIAL BALANCE
31-Oct-19
ACCOUNT TITLE	DEBIT	CREDIT
Cash	7,135.00
Accounts Receivable	37,950.00
Prepaid Insurance	6,080.00
Supplies	470.00
Land	1,16,150.00
Building	1,48,750.00
Accumulated Depreciation-Building		95,525.00
Equipment	1,33,800.00
Accumulated Depreciation-Equipment		1,01,420.00
Accounts Payable		12,145.00
Unearned Rent		1,200.00
Jan Pitman, Capital		2,22,685.00
Jan Pitman, Drawing	15,300.00
Fee Receivable	11,125.00
Salaries and Wages Payable		3550.00
Fees Earned		3,31,775.00
Rent Revenue		5,770.00
Insurance Expense	965.00
Supplies Expense	1,425.00
Depreciation Expense-Building	7,245.00
Depreciation Expense-Equipment	4,140.00
Salaries and Wages Expense	1,94,320.00
Utilities Expense	42,730.00
Advertising Expense	22,595.00
Repairs Expense	17,420.00
Miscellaneous Expense	6,470.00
Totals	7,74,070.00	7,74,070.00