Question

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	9,950
Accounts receivable	8,000
Prepaid insurance	3,300
Land	220,000
Buildings	62,500
Accumulated depreciation—buildings			25,000
Office equipment	96,000
Accumulated depreciation—office equipment			38,400
Accounts payable			29,200
Salaries payable			0
Deferred rent revenue			0
Common stock			240,000
Retained earnings			47,400
Service revenue			83,500
Interest revenue			4,400
Rent revenue			5,400
Salaries expense	33,000
Depreciation expense	0
Insurance expense	0
Utilities expense	21,700
Maintenance expense	18,850
Totals	473,300		473,300

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, $1,650.
4. Accrued salaries at year-end, $1,300.
5. Deferred rent revenue at year-end should be $850.

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.

From the trial balance and information given, prepare adjusting entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

• The buildings have an estimated useful life of 50 years with no salvage value. The company uses the straight-line depreciation method.

• The office equipment is depreciated at 10 percent of original cost per year.
• Prepaid insurance expired during the year, $1,650.
• Accrued salaries at year-end, $1,300.
• Deferred rent revenue at year-end should be $850.

	Transaction General Journal Debit Credit a

BAGLEY CONSULTING COMPANY Adjusted Trial Balance Account Title Debits Credits Cash Accounts receivable Prepaid insurance Land Buildings Accumulated depreciation—buildings Office equipment Accumulated depreciation—office equipment Accounts payable Salaries payable Deferred rent revenue Common stock Retained earnings Service revenue Interest revenue Rent revenue Salaries expense Depreciation expense Insurance expense Utilities expense Maintenance expense Totals $0 $0

Prepare closing entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

• Close the revenue accounts using Retained Earnings.
• Close the expense accounts using Retained Earnings.

	Date General Journal Debit Credit December 31, 2021

Prepare a post-closing trial balance.

	BAGLEY CONSULTING COMPANY Post-Closing Trial Balance Account Title Debits Credits Cash Accounts receivable Prepaid insurance Land Buildings Accumulated depreciation—buildings Office equipment Accumulated depreciation—office equipment Accounts payable Salaries payable Deferred rent revenue Common stock Retained earnings Totals $0 $0

Answer 1

1	Adjusting entry:
	Sl No.	Account titles and explanation					Debit	Credit
	a.	Depreciation expense			(62500/50)		1250
		Accumulated depreciation-Building						1250
		(Depreciation on building recorded)
	b.	Depreciation expense			(96000*10%)		9600
		Accumulated depreciation-Office equipment						9600
		(Depreciation on office equipment recorded)
	c.	Insurance expense					1650
		Prepaid insurance						1650
		(Insurance expired)
	d.	Salaries expense					1300
		Salaries payable						1300
		(Salaries accrued )
	e.	Rent revenue			(850-0)		850
		Deferred rent revenue						850
		(Deferred rent revenue properly recorded)
2			Cash							Accounts receivable
	Beg. Bal.		9950					Beg. Bal.		8000
			9950	0						8000	0
	End. Bal.		9950					End. Bal.		8000
			Prepaid insurance							Land
	Beg. Bal.		3300	1650	c.			Beg. Bal.		220000
			3300	1650						220000	0
	End. Bal.		1650					End. Bal.		220000
			Buildings						Accumulated depreciation-buildings
	Beg. Bal.		62500								25000	Beg. Bal.
			62500	0							1250	a.
	End. Bal.		62500							0	26250
											26250	End. Bal.
			Office equipment					Accumulated depreciation-Office equipment
	Beg. Bal.		96000								38400	Beg. Bal.
			96000								9600	b.
	End. Bal.		96000							0	48000
											48000	End. Bal.
			Accounts payable							Salaries payable
				29200	Beg. Bal.						0	Beg. Bal.
			0	29200							1300	d.
				29200	End. Bal.					0	1300
											1300	End. Bal.