Question

working backward from adjusted trial balance to determine adjusting entries

The partial spreadsheet shown below is taken from the books of Sunstate Computer Supply, a business owned by Michelle Thibeault, for the year ended December 31, 20-, Sunstate is on the periodic inventory system.

REQUIRED
1. Determine the adjusting entries by analyzing the difference
between the adjusted trial balance and the trial balance.
2. Journalize the adjusting entries in a general journal.

Answer 1

(1). Prepare the adjusting entries by analyzing the difference between the adjusted trial balance and the trial balance.

(2). Adjustment entries:

Adjusting entries are those entries that are made at the end of the year to update all the balances in the financial statements to show the true financial information and to maintain the records according to the accrual basis principle.

Date		Account titles and Explanation	Debit	Credit
Dec. 31	(a)	Income Summary	$82,500
		Merchandise Inventory		$82,500
		(To record adjusting entries of merchandise inventory)
Dec. 31	(b)	Merchandise Inventory	$93,500
		Income Summary		$93,500
		(To record adjusting entries of merchandise inventory)
Dec. 31	(c)	Sales Returns and Allowances	$2,420
		Customer Refunds Payable		$2,420
		(To record adjusting entry for sales returns and allowances)
Dec. 31	(d)	Income Summary	$3,520
		Estimated Returns Inventory		$3,520
		(To record adjusting entry for estimated returns inventory)
Dec. 31	(e)	Estimated Returns Inventory	$4,730
		Income Summary		$4,730
		(To record adjusting entry for estimated returns inventory)
Dec. 31	(f)	Supplies Expense	$5,170
		Supplies		$5,170
		(To record adjustment entry to record supplies expense)
Dec. 31	(g)	Insurance Expense	$1,760
		Prepaid Insurance		$1,760
		(To record adjustment entry to record prepaid insurance)
Dec. 31	(h)	Depreciation expense - Building	$13,750
		Accumulated depreciation - Building		$13,750
		(To record adjustment entry to record depreciation expense - Building)
Dec. 31	(I)	Depreciation expense - Store equipment	$5,500
		Accumulated depreciation - Store equipment		$5,500
		(To record adjustment entry to record depreciation expense - Store equipment)
Dec. 31	(j)	Wages Expense	$3,850
		Wages Payable		$3,850
		(To record adjustment entry to record wages expense)
Dec. 31	(k)	Unearned Rent Revenue	$4,840
		Rent Revenue		$4,840
		(To record adjustment entry to record unearned rent revenue)