Question

Pitman Company is a small editorial services company owned and operated by Jan Pitman. On October 31, 2019 the end of the current year, Pitman Company’s accounting clerk prepared the following unadjusted trial balance:

Pitman Company

UNADJUSTED TRIAL BALANCE

October 31, 2019

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash	7,420.00
2	Accounts Receivable	38,115.00
3	Prepaid Insurance	7,050.00
4	Supplies	1,630.00
5	Land	114,550.00
6	Building	150,250.00
7	Accumulated Depreciation-Building		88,800.00
8	Equipment	133,200.00
9	Accumulated Depreciation-Equipment		96,605.00
10	Accounts Payable		12,560.00
11	Unearned Rent		7,035.00
12	Jan Pitman, Capital		217,215.00
13	Jan Pitman, Drawing	15,055.00
14	Fees Earned		327,900.00
15	Salaries and Wages Expense	194,870.00
16	Utilities Expense	42,345.00
17	Advertising Expense	22,335.00
18	Repairs Expense	17,690.00
19	Miscellaneous Expense	5,605.00
20	Totals	750,115.00	750,115.00

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

a.	Unexpired insurance at October 31, $6,130.
b.	Supplies on hand at October 31, $615.
c.	Depreciation of building for the year, $7,610.
d.	Depreciation of equipment for the year, $4,300.
e.	Unearned rent at October 31, $1,490.
f.	Accrued salaries and wages at October 31, $3,040.
g.	Fees earned but unbilled on October 31, $10,865.

	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

*1. Insurance expenses- Debit and Prepaid Insurance- Credit, Amount left after deducting unexpired income from balance.

2. The remaining amount after deducting supplies in hands shall be treated as consumed.

5. Rent earned for the period expired shall be treated as revenue and credited to rent revenue, after deducting unearned renet a/c.

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