Question

Garvey Company’s unadjusted trial balance includes the following account balances as of December 31, 2015:

	Debits			Credits
Cash	$	69,420
Accounts receivable		118,700
Interest receivable		1,380
Supplies		141,400
Prepaid insurance		8,900
Notes Receivable (short-term)		51,200
Equipment		283,400
Accumulated Depreciation––Equipment				$	65,700
Accounts payable					106,100
Salaries and Wages Payable					22,000
Unearned revenue					9,600
Notes Payable (long-term)					89,000
Common Stock					220,500
Retained earnings					146,300
Service revenue					41,300
Interest revenue					22,300
Supplies Expense		0
Repair and Maintenance Expense		27,000
Rent Expense		18,200
Depreciation Expense		0
Insurance Expense		0
Salaries and Wages Expense		3,200
Totals	$	722,800		$	722,800

The following data are available to determine adjusting entries:

A)	Insurance purchased at the beginning of July for $8,900 provided coverage for twelve months (July 2015 through June 2016). The insurance coverage for July through December totaling $4,450 has now been used.
B)	The company estimates $8,350 in depreciation each year.
C)	Account showed $87,700 of supplies on hand at the end of the year.
D)	An additional $300 of interest has been earned but has not yet been uncollected on the outstanding notes receivable.
E)	Services in the amount of $5,800 were performed for customers who had previously paid in advance.
F)	Services in the amount of $2,400 were performed; these services have not yet been billed or recorded.

Required:
a.	Prepare the adjusting entries that are required at the end of the period. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) b. Prepare an adjusted trial balance by completing the related columns in the table below.

Answer 1

Date	Accounts Title and Explanation	Debit $	Credit $
1	Insurance Expense	$   4,450
	Prepaid insurance		$   4,450
2	Depreciation Expense	$   8,350
	Accumulated Depreciation. - Equipment		$   8,350
3	Supplies Expense	$ 53,700
	Supplies		$ 53,700
	Supplies Exp. = 141400 -87700 = $53700
4	Interest Recivable	$      300
	Interest Revenue		$      300
5	Unearned Revenue	$   5,800
	Service Revenue		$   5,800
6	Accounts Receivable	$   2,400
	Service Revenue		$   2,400

Garvey Company
Adjusted Trial Balance
Dec 31, 2015
	Debit	Credit
Cash	69,420
Accounts receivable	121,100
Interest receivable	1,680
Supplies	87,700
Prepaid insurance	4,450
Notes Receivable (short-term)	51,200
Equipment	283,400
Accumulated Depreciation––Equipment		74,050
Accounts payable		106,100
Salaries and Wages Payable		22,000
Unearned revenue		3,800
Notes Payable (long-term)		89,000
Common Stock		220,500
Retained earnings		146,300
Service revenue		49,500
Interest revenue		22,600
Supplies Expense	53700
Repair and Maintenance Expense	27,000
Rent Expense	18,200
Depreciation Expense	8350
Insurance Expense	4450
Salaries and Wages Expense	3,200
Totals	733,850	733,850