Question

The unadjusted trial balance as of December 31, 2018, for the Bagley Consulting Company appears below. December 31 is the company’s fiscal year-end.

Account Title	Debits		Credits
Cash	5,350
Accounts receivable	7,500
Prepaid insurance	3,100
Land	210,000
Buildings	57,500
Accumulated depreciation—buildings			23,000
Office equipment	90,000
Accumulated depreciation—office equipment			36,000
Accounts payable			28,500
Salaries and wages payable			0
Deferred rent revenue			0
Common stock			220,000
Retained earnings			46,500
Sales revenue			80,500
Interest revenue			4,000
Rent revenue			4,800
Salaries and wages expense	31,000
Depreciation expense	0
Insurance expense	0
Utility expense	20,700
Maintenance expense	18,150
Totals	443,300		443,300

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, $1,550.
4. Accrued salaries and wages at year-end, $1,200.
5. Deferred rent revenue at year-end should be $750.

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.

Answer 1

Bagley Consulting Company
Adjusting entries
Date	Account	Debit	Credit	Calculation
1	Depreciation expense	$        1,150		=57,500/50 yrs
	Accumulated Depreciation - Buildings		$        1,150
2	Depreciation expense	$        9,000		=90,000*10%
	Accumulated Depreciation - Office Equipment		$        9,000
3	Insurance expense	$        1,550
	Prepaid Insurance		$        1,550
4	Salaries and wages expense	$        1,200
	Salaries and wages payable		$        1,200
5	Rent Revenue	$           750
	Deferred rent revenue		$           750
Closing entries
CJE 1	Sales Revenue	$     80,500
	Interest Revenue	$        4,000
	Rent Revenue	$        4,050
	Income Summary		$     88,550
CJE 2	Income Summary	$     82,750
	Salaries and wages expense		$     32,200
	Depreciation expense		$     10,150
	Insurance expense		$        1,550
	Utility expense		$     20,700
	Maintenance expense		$     18,150
CJE 3	Income Summary	$        5,800		=88,550-82,750
	Retained Earnings		$        5,800

Bagley Consulting Company	Adjusted TB			Post Closing TB
Account Names	Debit	Credit		Debit	Credit
Cash	5,350			5,350
Accounts Receivable	7,500			7,500
Prepaid Insurance	1,550			1,550
Land	210,000			210,000
Buildings	57,500			57,500
Accumulated Depreciation - Buildings		24,150			24,150
Office Equipment	90,000			90,000
Accumulated Depreciation - Office Equipment		45,000			45,000
Accounts Payable		28,500			28,500
Salaries and wages payable		1,200			1,200
Deferred rent revenue		750			750
Common Stock		220,000			220,000
Retained Earnings		46,500			52,300
Sales Revenue		80,500
Interest Revenue		4,000
Rent Revenue		4,050
Salaries and wages expense	32,200
Depreciation expense	10,150
Insurance expense	1,550
Utility expense	20,700
Maintenance expense	18,150
Totals	454,650	454,650		371,900	371,900