Question

In: Accounting

The accountant for Eva’s Laundry prepared the following unadjusted and adjusted trial balances. Assume that all...

The accountant for Eva’s Laundry prepared the following unadjusted and adjusted trial balances. Assume that all balances in the unadjusted trial balance and the amounts of the adjustments are correct.

Eva's Laundry

UNADJUSTED TRIAL BALANCE

May 31, 2016

ACCOUNT TITLE DEBIT CREDIT

1

Cash

7,565.00

2

Accounts Receivable

18,710.00

3

Laundry Supplies

3,700.00

4

Prepaid Insurance*

5,655.00

5

Laundry Equipment

193,800.00

6

Accumulated Depreciation-Laundry Equipment

47,930.00

7

Accounts Payable

9,630.00

8

Wages Payable

9

Eva Bruns, Capital

114,270.00

10

Eva Bruns, Drawing

29,060.00

11

Laundry Revenue

183,300.00

12

Wages Expense

49,385.00

13

Rent Expense

25,075.00

14

Utilities Expense

18,820.00

15

Depreciation Expense

16

Laundry Supplies Expense

17

Insurance Expense

18

Miscellaneous Expense

3,360.00

19

Totals

355,130.00

355,130.00

* $3,130 of insurance expired during the year.

Identify the errors in the accountant's adjusting entries by preparing a corrected adjusted trial balance. Assume that none of the accounts were affected by more than one adjusting entry. If an amount box does not require an entry, leave it blank.

Erroneous Adjusted Trial Balance

Eva's Laundry

ADJUSTED TRIAL BALANCE

May 31, 2016

ACCOUNT TITLE DEBIT CREDIT

1

Cash

7,565.00

2

Accounts Receivable

23,570.00

3

Laundry Supplies

6,455.00

4

Prepaid Insurance*

3,700.00

5

Laundry Equipment

181,125.00

6

Accumulated Depreciation-Laundry Equipment

47,930.00

7

Accounts Payable

9,630.00

8

Wages Payable

1,245.00

9

Eva Bruns, Capital

114,270.00

10

Eva Bruns, Drawing

29,060.00

11

Laundry Revenue

183,300.00

12

Wages Expense

49,385.00

13

Rent Expense

25,075.00

14

Utilities Expense

18,820.00

15

Depreciation Expense

12,675.00

16

Laundry Supplies Expense

2,755.00

17

Insurance Expense

130.00

18

Miscellaneous Expense

3,360.00

19

Totals

363,675.00

356,375.00

* $3,130 of insurance expired during the year.

Corrected Adjusted Trial Balance

Identify the errors in the accountant's adjusting entries by preparing a corrected adjusted trial balance. Assume that none of the accounts were affected by more than one adjusting entry. If an amount box does not require an entry, leave it blank.

Eva's Laundry

ADJUSTED TRIAL BALANCE

May 31, 2016

ACCOUNT TITLE DEBIT CREDIT

1

Cash

2

Accounts Receivable

3

Laundry Supplies

4

Prepaid Insurance*

5

Laundry Equipment

6

Accumulated Depreciation-Laundry Equipment

7

Accounts Payable

8

Wages Payable

9

Eva Bruns, Capital

10

Eva Bruns, Drawing

11

Laundry Revenue

12

Wages Expense

13

Rent Expense

14

Utilities Expense

15

Depreciation Expense

16

Laundry Supplies Expense

17

Insurance Expense

18

Miscellaneous Expense

19

Totals

* $3,130 of insurance expired during the year.

Solutions

Expert Solution

1. The accountant debited Accounts Receivable for $5, 060 but did not credit Laundry Revenue. This adjusting entry represents accrued laundry revenue.
2. The accountant debited rather than credited Laundry Supplies for $ 2,755.
3. The accountant credited the prepaid insurance account for $1,955, but debited the insurance expense account for only $ 130.
4. The accountant credited Laundry Equipment for the depreciation expense of $ 12,675 instead of crediting the accumulated depreciation account.
5. The accountant did not debit Wages Expense for $ 1,245. The corrected adjusted trial balance is shown below.
Eva’s Laundry Adjusted Trial Balance May 31, 2016
Debit Balances Credit Balances
Cash 7,565
Accounts Receivable 23,570
Laundry Supplies 945
Prepaid Insurance 3,900
Laundry Equipment 1,93,800
Accumulated Depreciation — Laundry Equipment 60,605
Accounts Payable 9,630
Wages Payable 1,245
Eva Bruns Capital 1,14,270
Eva Bruns Drawings 29,060
Laundry Revenue 1,88,360
Wages Expense 50,630
Rent Expense 25,075
Utilities Expense 18,820
Depreciation Expense 12,675
Laundry Supplies Expense 2,755
Insurance Expense 1,955
Miscellaneous Expense 3,360
3,74,110 3,74,110

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