Question

Sears Editing Company is a small editorial services company owned and operated by Deloris Sears. On January 31, 20Y1, the end of the current year, Sears Editing Company’s accounting clerk prepared the following unadjusted trial balance:

Sears Editing Company

UNADJUSTED TRIAL BALANCE

January 31, 20Y1

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash	7,655.00
2	Accounts Receivable	38,345.00
3	Prepaid Insurance	7,075.00
4	Supplies	2,290.00
5	Land	113,500.00
6	Building	149,450.00
7	Accumulated Depreciation-Building		87,905.00
8	Equipment	133,250.00
9	Accumulated Depreciation-Equipment		96,435.00
10	Accounts Payable		11,860.00
11	Unearned Rent		6,705.00
12	Common Stock		74,530.00
13	Retained Earnings		146,290.00
14	Dividends	14,690.00
15	Fees Earned		328,600.00
16	Salaries and Wages Expense	198,220.00
17	Utilities Expense	42,120.00
18	Advertising Expense	22,315.00
19	Repairs Expense	17,210.00
20	Miscellaneous Expense	6,205.00
21	Totals	752,325.00	752,325.00

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

a.	Unexpired insurance at January 31, $5,860.
b.	Supplies on hand at January 31, $545.
c.	Depreciation of building for the year, $7,985.
d.	Depreciation of equipment for the year, $4,080.
e.	Rent unearned at January 31, $1,145.
f.	Accrued salaries and wages at January 31, $3,490.
g.	Fees earned but unbilled on January 31, $11,640.

	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

Requirement 1:

Date	Account title and explanation	Debit	Credit
Jan 31	Insurance expense [7075-5860]	$1,215
	Prepaid insurance		$1,215
	[To record insurance expense]
Jan 31	Supplies expense [2290-545]	$1,745
	Supplies		$1,745
	[To record supplies expense]
Jan 31	Depreciation Expense-Buildings	$7,985
	Accumulated depreciation-Buildings		$7,985
	[To record depreciation expense on buildings]
Jan 31	Depreciation Expense-Equipment	$4,080
	Accumulated depreciation-Equipment		$4,080
	[To record depreciation expense on equipment]
Jan 31	Unearned rent [6705-1145]	$5,560
	Rent revenue		$5,560
	[To record rent revenue from unearned rent]
Jan 31	Salaries and wages expense	$3,490
	Salaries and wages payable		$3,490
	[To record accrued salaries and wages]
Jan 31	Accounts receivable	$11,640
	Fees Earned		$11,640
	[To record accrued revenues]

Requirement 2:

Adjusted Trial Balance
January 31,20Y1
Account title	Debit	Credit
Cash	7,655.00
Accounts Receivable	49,985.00
Prepaid Insurance	5,860.00
Supplies	545.00
Land	113,500.00
Building	149,450.00
Accumulated Depreciation-Building		95,890.00
Equipment	133,250.00
Accumulated Depreciation-Equipment		100,515.00
Accounts Payable		11,860.00
Salaries and wages payable		3,490.00
Unearned Rent		1,145.00
Common Stock		74,530.00
Retained Earnings		146,290.00
Dividends	14,690.00
Fees Earned		340,240.00
Rent revenue		5,560.00
Salaries and Wages Expense	201,710.00
Utilities Expense	42,120.00
Advertising Expense	22,315.00
Repairs Expense	17,210.00
Miscellaneous Expense	6,205.00
Insurance expense	1,215.00
Supplies expense	1,745.00
Depreciation expense-buildings	7,985.00
Depreciation expense-equipment	4,080.00
Totals	779,520.00	779,520.00