Question

Elliott, Inc. has completed operations for the month of December. The first 3 steps of the accounting cycle have been completed:

1. Journal entries for December’s transactions have been recorded

2. Posting has been completed.

3. The unadjusted trial balance has been prepared. The unadjusted balances are entered in the General Ledger accounts, which is found on Sheet 2 in the file.

Following instructions A – C, you will complete the next steps in the accounting cycle:

1. Prepare adjusting entries

2. Post the adjusting entries to the General Ledger

3. Prepare the Adjusted Trial Balance.

A. Name Sheet 1 “General Journal”

Use the adjusting entry information below to record adjusting journal entries, dated December 31, in the General Journal. You will need to refer to the unadjusted balances in the General Ledger, found on Sheet 2, for some of these adjusting entries:

1. Depreciation on the computer is estimated at $1,500.

2. $196 of the unearned revenue was earned before the end of the period.

3. Accrued salary expense of $429 that hasn’t been paid

4. A review of insurance policies shows $1,400 of prepaid insurance has been used by the end of the period.

5. $500 of revenue has been earned, but it hasn’t been received or recorded.

6. A physical inventory shows $172 of supplies on hand.

2. Name Sheet 2 “General Ledger”

Post the adjusting journal entries, recorded in the General Journal, which was on Sheet 1 before you renamed it, to the accounts in the General Ledger, which was Sheet 2 before you renamed it. Enter the date of the journal entry, the amount of the journal entry, and compute the new balance. Be sure to enter “Adjusting” in the Item column. Enter the appropriate reference in the Post. Ref. column in both the General Journal (found on Sheet 1) and the General Ledger (found on Sheet 2).

You must use formulas to compute ALL account balances. If you use a calculator or mental math to compute balances, points will be deducted.

3. Name Sheet 3 “Adjusted Trial Balance”

Prepare the Adjusted Trial Balance for Elliott, Inc. at December 31, 2018, using the ending balances in the General Ledger. You must use formulas to compute the totals for the debit and credit columns. Don’t forget the heading!

General Journal            Page 12
Date		Description				Post Ref.	Debit	Credit

General ledger: (balance column)(date for all is Dec 31)
Cash....debit-7,750
Account receivable...debit-1,199
Supplies...debit-360
Prepaid Insurance...debit 2,350
Computer...debit-6,000
Accumulated depreciation....credit-1000
Accounts payable...credit-987
Salaries payable....credit-100
Unearned revenue...credit-240
Common stock...credit-5,500
Retained earnings....credit- 3,017
Dividends....debit-500
Service revenue...credit-11340
Salaries expense....debit-2,600
Depreciation expense...none
Rent expense...debit-1,000
Insurance expense...none
Utility expense....debit-375
Supplies expense...none
Auto expense...debit-50

Answer 1

Journal Entries						Adjusted Trial Balance as on 31 December:
Date	Account	Post Ref.	Debit	Credit		Account	Unadjusted figures ($)		Adjustments		Adjusted figures ($)
December, 31	Depreciation Expense A/c Dr.	a	1,500.00				Debit	Credit	Debit	Credit	Debit	Credit
	To Accumulated Depreciation A/c			1,500.00		Cash	7,750.00	-	-	-	7,750.00	-
	(being depreciation expense on computer recorded)					Account receivable	1,199.00	-	500.00	-	1,699.00	-
December, 31	Unearned Revenue A/c Dr.	b	196.00			Supplies	360.00	-	-	188.00	172.00	-
	To Service Revenue A/c Dr.			196.00		Prepaid Insurance	2,350.00	-	-	1,400.00	950.00	-
	(being service revenue recognized from unearned revenue)					Computer	6,000.00	-	-	-	6,000.00	-
December, 31	Salaries Expense A/c Dr.	c	429.00			Accumulated depreciation	-	1,000.00	-	1,500.00	-	2,500.00
	To Salaries Payable A/c			429.00		Accounts payable	-	987.00	-	-	-	987.00
	(being salary payable created )					Salaries payable	-	100.00	-	429.00	-	529.00
December, 31	Insurance expense A/c Dr.	d	1,400.00			Unearned revenue	-	240.00	196.00	-	-	44.00
	To Prepaid Insurance A/c			1,400.00		Common stock	-	5,500.00	-	-	-	5,500.00
	(being insurance expense recorded )					Retained earnings	-	3,017.00	-	-	-	3,017.00
December, 31	Account receivable A/c Dr.	e	500.00			Dividends	500.00	-	-	-	500.00	-
	To Service Revenue A/c Dr.			500.00		Service revenue	-	11,340.00	-	696.00	-	12,036.00
	(being service revenue recognized)					Salaries expense	2,600.00	-	429.00	-	3,029.00	-
December, 31	Supplies Expense A/c Dr.	f	188.00			Depreciation expense	-	-	1,500.00	-	1,500.00	-
	To Supplies A/c			188.00		Rent expense	1,000.00	-	-	-	1,000.00	-
	(being supplies expense recorded )					Insurance expense	-	-	1,400.00	-	1,400.00	-
						Utility expense	375.00	-	-	-	375.00	-
						Supplies expense	-	-	188.00	-	188.00	-
						Auto expense	50.00	-	-	-	50.00	-
						Total	22,184.00	22,184.00	4,213.00	4,213.00	24,613.00	24,613.00