Question

Problem 2-9 (Algo) Accounting cycle; unadjusted trial balance through closing [LO2-4, 2-6, 2-8]

The unadjusted trial balance as of December 31, 2021, for the Bagley Consulting Company appears below. December 31 is the company’s reporting year-end.

Account Title	Debits		Credits
Cash	15,050
Accounts receivable	6,750
Prepaid insurance	2,700
Land	190,000
Buildings	47,500
Accumulated depreciation—buildings			19,000
Office equipment	81,000
Accumulated depreciation—office equipment			32,400
Accounts payable			27,450
Salaries payable			0
Deferred rent revenue			0
Common stock			200,000
Retained earnings			45,150
Service revenue			76,000
Interest revenue			3,400
Rent revenue			3,900
Salaries expense	28,000
Depreciation expense	0
Insurance expense	0
Utilities expense	19,200
Maintenance expense	17,100
Totals	407,300		407,300

Information necessary to prepare the year-end adjusting entries appears below.

1. The buildings have an estimated useful life of 50 years with no salvage value. The company uses the straight-line depreciation method.
2. The office equipment is depreciated at 10 percent of original cost per year.
3. Prepaid insurance expired during the year, $1,350.
4. Accrued salaries at year-end, $1,050.
5. Deferred rent revenue at year-end should be $600.

Required:
1. From the trial balance and information given, prepare adjusting entries.
2. Post the beginning balances and adjusting entries into the appropriate T-accounts.
3. Prepare an adjusted trial balance.
4. Prepare closing entries.
5. Prepare a post-closing trial balance.

Answer 1