Preparing adjusting entries; preparing an adjusted trial balance; and preparing financial...

Preparing adjusting entries; preparing an adjusted trial balance; and preparing financial statements from an adjusted trial balance

This problem continues the Draper Consulting situation

Chapter 2. Start from the trial balance and the posted T-accounts that Draper Consulting prepared at December 18, 2012, as follows:

Later in December, the business completed these transactions, as follows:

Requirements

1. Open these additional T-accounts: Accumulated depreciation—equipment; Accumulated depreciation—furniture; Salary payable; Unearned service revenue; Depreciation expense—equipment; Depreciation expense—furniture; Supplies expense.

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2. Journalize the transactions of December 21–30.

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3. Post to the T-accounts, keying all items by date.

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4. Prepare a trial balance at December 31. Also set up columns for the adjustments and for the adjusted trial balance, as illustrated in Exhibit 3-8.

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5. At December 31, the business gathers the following information for the adjusting entries:

a. Accrued service revenue, $550.

b. Earned $700 of the service revenue collected in advance on December 21.

c. Supplies on hand, $200.

d. Depreciation expense—equipment, $30; furniture, $70.

e. Accrued $685 expense for secretary’s salary.

On your worksheet, make these adjustments directly in the adjustments columns, and complete the adjusted trial balance at December 31. Throughout the book, to avoid rounding errors, we base adjusting entries on 30-day months and 360-day years.

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6. Journalize and post the adjusting entries. In the T-accounts, denote each adjusting amount as Adj and an account balance as Bal.

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7. Prepare the income statement and the statement of owner’s equity of Draper Consulting for the month ended December 31, 2012, and prepare the balance sheet at that date.