Question

Trial Balance and Adjusting Entries Deliverall, a mailing service, has just completed its first full year of operations on December 31, 2012. The firm's general ledger account balances before year-end adjustments are given below. No adjusting entries have been made to the accounts at any time during the year. Assume that all balances are normal. Cash $2,760 Accounts Payable $3,240 Accounts Receivable 6,144 Common Stock 11,436 Prepaid Advertising 2,016 Mailing Fees Earned 103,200 Supplies 7,524 Wages Expense 46,560 Equipment 50,688 Rent Expense 7,560 Notes Payable 9,000 Utilities Expense 3,624 An analysis of the firm's records reveals the following: 1. The balance in Prepaid Advertising represents the amount paid for newspaper advertising for one year. The agreement, which calls for the same amount of space each month, covers the period from February 1, 2012 to January 31, 2013. Deliverall did not advertise during its first month of operations. 2. The equipment, purchased January 1, has an estimated life of 8 years. 3. Utilities expense does not include expense for December estimated at $390. The bill will not arrive until January 2013. 4. At year-end, employees have earned $1,440 in wages that will not be paid until January. 5. Supplies on hand at December 31 are $1,824. 6. At year-end, unpaid interest of $540 has accrued on notes payable. 7. The firm's lease calls for rent of $630 per month payable on the first of each month, plus an amount equal to 0.5% of annual mailing fees earned. The rental percentage is payable within 15 days after the end of the year.

Answer 1

Answer A
Trial Balance
Account title	debit	credit
Cash	$         2,300
Accounts receivable	$         5,120
Prepaid Advertising	$         1,680
Supplies	$         6,270
Equipment	$      42,240
Notes Payable		$         7,500
Accounts Payable		$         2,700
Common Stock		$         9,530
Mailing fees earned		$      86,000
Wages expense	$      38,800
Rent expense	$         6,300
Utilities expense	$         3,020
	$   1,05,730	$   1,05,730

	Answer B-1
	Cash	Accounts   receivable	Prepaid   Advertising	Supplies	Equipment	Notes Payable	Accounts Payable	Accumulated   Depreciation	Wages Payable	Interest payable	Rent payable	Common Stock	Mailing fees   earned	Wages expense	Rent expense	Utilities expense	Advertising   expense	Depreciation   expense	Supplies expense	Interest expense
Balance	$                                              2,300	$         5,120	$          1,680	$          6,270	$         42,240	$         7,500	$         2,700					$         9,530	$         86,000	$         38,800	$         6,300	$         3,020
1			$        -1,540														$         1,540
2								$         5,280										$         5,280
3							$            325									$            325
4									$         1,200					$           1,200
5				$        -4,750															$         4,750
6										$        450										$        450
7											$        955				$            955
	$                                              2,300	$         5,120	$              140	$          1,520	$         42,240	$         7,500	$         3,025	$         5,280	$         1,200	$        450	$        955	$         9,530	$         86,000	$         40,000	$         7,255	$         3,345	$         1,540	$         5,280	$         4,750	$        450

	Answer B-2
	ADJUSTING ENTRIES
S.No	Account title	debit	credit
1	Advertising   expense	$         1,540
	Prepaid   Advertising		$          1,540
2	Depreciation   expense	$         5,280
	Accumulated   Depreciation		$          5,280
3	Utilities expense	$            325
	Accounts Payable		$              325
4	Wages expense	$         1,200
	Wages Payable		$          1,200
5	Supplies expense	$         4,750
	Supplies		$          4,750
6	Interest expense	$            450
	Interest payable		$              450
7	Rent expense	$            955
	Rent payable		$              955

Answer C
T-accounts
Advertising expense
Balance	$                -	End. Bal	$          1,540
Prepaid Advertising	$         1,540
	$         1,540		$          1,540
Prepaid Advertising
Balance	$         1,680	Advertising   expense	$          1,540
		End. Bal	$              140
	$         1,680		$          1,680
Depreciation expense
Accumulated Depreciation	$         5,280	End. Bal	$          5,280
Accumulated Depreciation
End. Bal	$         5,280	Depreciation   expense	$          5,280
Utilities expense
Balance	$         3,020	End. Bal	$          3,345
Accounts Payable	$            325
	$         3,345		$          3,345
Accounts Payable
End. Bal	$         3,025	Balance	$          2,700
		Utilities expense	$              325
	$         3,025		$          3,025
Wages expense
Balance	$      38,800	End. Bal	$        40,000
Wages Payable	$         1,200
	$      40,000		$        40,000
Wages Payable
End. Bal	$         1,200	Balance	$                 -
		Wages expense	$          1,200
	$         1,200		$          1,200
Supplies expense
Supplies	$         4,750	End. Bal	$          4,750
Supplies
Balance	$         6,270	Supplies expense	$          4,750
		End. Bal	$          1,520
	$         6,270		$          6,270
Interest expense
Interest payable	$            450	End. Bal	$              450
Interest payable
End. Bal	$            450	Interest expense	$              450
Rent expense
Rent payable	$            955	End. Bal	$              955
Rent payable
End. Bal	$            955	Rent expense	$              955

Answer 2

Deliverali Adjusting Enteries Date Particulars Debit in $ Credit in $ Dec-31 Advertising Expense 1848 Prepaid Advertising 1848 (To record 11 months of advertising) 2016 x 11/12 6336 Unadjusted Trial Balance For the period ending December 31 Particulars Debit in $ Credit in $ Cash 2760 Accounts Receivable 6144 Prepaid Advertising 2016 Supplies 7524 Equipment 50688 Accounts Payable 3240 Notes Payable 9000 Common Stock 11436 Mailing Fees Earned 103200 Wages Expense 46560 Rent Expense 7560 Utilities Expense 3624 Totals 126876 126876 Dec-31 Depreciation Expense - Equip. Accum.Depre - Equip. (To record depreciation) 50688/8 6336 390 Dec-31 Utilities Expense Accounts Payable (Expense accrued) 390 1440 Dec-31 Wages Expense Wages Payable (Wages accrued) 1440 5700 Dec-31 Supplies Expense Supplies (Supplies used) 5700 540 Dec-31 Interest Expense Interest Payable (Interest accrued) 540 516 Dec-31 Rent Expense 516 Rent Payable (To record additional rent owed under lease) 103200 x 0.5%