Question

Garvey Company’s unadjusted trial balance includes the following account balances as of December 31, 2015: Debits Credits Cash $ 69,290 Accounts receivable 118,100 Interest receivable 1,360 Supplies 140,700 Prepaid insurance 8,850 Notes Receivable (short-term) 50,900 Equipment 282,000 Accumulated Depreciation––Equipment $ 65,400 Accounts payable 105,600 Salaries and Wages Payable 21,900 Unearned revenue 9,500 Notes Payable (long-term) 88,600 Common Stock 219,400 Retained earnings 145,600 Service revenue 41,100 Interest revenue 22,200 Supplies Expense 0 Repair and Maintenance Expense 26,850 Rent Expense 18,100 Depreciation Expense 0 Insurance Expense 0 Salaries and Wages Expense 3,150 Totals $ 719,300 $ 719,300

The following data are available to determine adjusting entries: A) Insurance purchased at the beginning of July for $8,850 provided coverage for twelve months (July 2015 through June 2016). The insurance coverage for July through December totaling $4,425 has now been used. B) The company estimates $8,300 in depreciation each year. C) Account showed $87,200 of supplies on hand at the end of the year. D) An additional $290 of interest has been earned but has not yet been uncollected on the outstanding notes receivable. E) Services in the amount of $5,750 were performed for customers who had previously paid in advance. F) Services in the amount of $2,300 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 b. Prepare an adjusted trial balance by completing the related columns in the table below.

Answer 1

Garvey Company

Adjusting journal Entries

On December 31,2015

Description	Debit	Credit
(Al Insurance Expenses	4,425
To Prepaid Insurance		4,425
(B) Depreciation Expenses	8,300
To Accumulated Depreciation		8,300
(C) Supplies Expenses	53,500
To Supplies		53,500
(D) Interest Receivable	290
Interest Revenue		290
(E) Unearned Revenue	5,750
To Sales Revenue		5,750
(F) Accounts Receivable	2,300
To Service Revenue		2,300

Garvey Company

Adjusting Trial Balance

On December 31,2015

Items	Debit	Credit	Adjustment Debit	Adjustment Credit	Post Adjustment Debit	Post Adjustment Credit
Cash	69,290				69,290
Accounts receivable	118,100		2,300		120,400
Interest Receivable	1,360		290		1,650
Supplies	140,700			53,500	87,200
Prepaid Insurance	8,850			4,425	4,425
Notes Receivable (Short-term)	50,900				50,900
Equipment	282,000				282,000
Accounts Payable		105,600				105,600
Salaries& Wages Payable		21,900				21,900
Unearned Revenue		9,500	5,750			3,750
Notes Payable (Long-term)		88,600				88,600
Common Stock		219,400				219,400
Retained Earnings		145,600				145,600
Service Revenue		41,100		5,750+2,300		49,150
Interest Revenue		22,200		290		22,490
Accumulated Depreciation-Equipment		65,400		8,300		73,700
Supplies Expenses	0		53,500		53,500
Repairs& Maintenance Expenses	26,850				26,850
Rent Expenses	18,100				18,100
Depreciation Expense	0		8,300		8,300
Salaries & wages Expenses	3,150				3,150
Insurance Expenses	0		4,425		4,425
Total	719,300	719,300	74,565	74,565	730,190	730,190