Question

The balances of the ledger accounts for Oleman Services on January 31, 2019, and the information needed for adjustments are shown below.

  

Account Name	Balance
Cash	$	6,500
Accounts Receivable		3,500
Supplies		1,200
Prepaid Insurance		3,000
Equipment		7,500
Accumulated Depreciation–Equipment		−
Accounts Payable		3,400
Jeff Oleman, Capital		17,500
Jeff Oleman, Drawing		1,500
Fees Income		9,500
Advertising Expense		600
Rent Expense		1,200
Salaries Expense		5,000
Supplies Expense		−
Insurance Expense		−
Utilities Expense		400
Depreciation Expense–Equipment		−

  
Adjustment information:

The supplies were purchased on January 1, 2019. An inventory of supplies showed $600 on hand on January 31, 2019.

The amount of Prepaid Insurance represents a payment made January 1, 2019, for a six-month insurance policy.

The equipment, purchased January 1, 2019, has an estimated useful life of 5 years with no salvage value. The firm uses the straight-line method of depreciation.

  
Prepare the Trial Balance section, record the adjustments, and complete the worksheet.

Answer 1

Oleman Services
Worksheet
January 31 2019
	Unadjusted Balance		Adjustments		Balance after Adjustment
Account Title	Debt	Credit	Debt	Credit	Debt	Credit
Cash	$    6,500.00				$    6,500.00
Accounts Receivable	$    3,500.00				$    3,500.00
Supplies	$    1,200.00			$     600.00	$        600.00
Prepaid Insurance	$    3,000.00			$     500.00	$    2,500.00
Equipment	$    7,500.00				$    7,500.00
Accumulated Depreciation–Equipment				$     125.00		$        125.00
Accounts Payable		$    3,400.00				$     3,400.00
Jeff Oleman, Capital		$ 17,500.00				$ 17,500.00
Jeff Oleman, Drawing	$    1,500.00				$    1,500.00
Fees Income		$    9,500.00				$     9,500.00
Advertising Expense	$        600.00				$        600.00
Rent Expense	$    1,200.00				$    1,200.00
Salaries Expense	$    5,000.00				$    5,000.00
Supplies Expense			$     600.00		$        600.00
Insurance Expense			$     500.00		$        500.00
Utilities Expense	$        400.00				$        400.00
Depreciation Expense–Equipment			$     125.00		$        125.00
Total	$ 30,400.00	$ 30,400.00	$ 1,225.00	$ 1,225.00	$ 30,525.00	$ 30,525.00

Oleman Services
Adjusted Trial balance
for the month ended January 31 2019
Account Title	Debt	Credit
Cash	$    6,500.00
Accounts Receivable	$    3,500.00
Supplies	$        600.00
Prepaid Insurance	$    2,500.00
Equipment	$    7,500.00
Accumulated Depreciation–Equipment		$        125.00
Accounts Payable		$     3,400.00
Jeff Oleman, Capital		$ 17,500.00
Jeff Oleman, Drawing	$    1,500.00
Fees Income		$     9,500.00
Advertising Expense	$        600.00
Rent Expense	$    1,200.00
Salaries Expense	$    5,000.00
Supplies Expense	$        600.00
Insurance Expense	$        500.00
Utilities Expense	$        400.00
Depreciation Expense–Equipment	$        125.00
Total	$ 30,525.00	$ 30,525.00

Adjustment Entries
31-Jan	Supplies Expense	$        600.00
	Supplies		$        600.00
	(Office supplies Consumed)
31-Jan	Insurance Expense	$        500.00*
	Prepaid Insurance		$        500.00
	(Insurance for 1 month expired)
31-Jan	Depreciation expense-Equipment	$        125.00**
	Accumulated Depreciation-Equipment		$        125.00
	(Depreciation on Equipment for 1 month)

*3000/6 x 1

**(7500/5)/12 x 1