Question

Rowland Company is a small editorial services company owned and operated by Marlene Rowland. On August 31, 2018, the end of the current year, Rowland Company’s accounting clerk prepared the following unadjusted trial balance:

Rowland Company

UNADJUSTED TRIAL BALANCE

August 31, 2018

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash	7,655.00
2	Accounts Receivable	38,345.00
3	Prepaid Insurance	7,075.00
4	Supplies	2,290.00
5	Land	113,500.00
6	Building	149,450.00
7	Accumulated Depreciation-Building		87,905.00
8	Equipment	133,250.00
9	Accumulated Depreciation-Equipment		96,435.00
10	Accounts Payable		11,860.00
11	Unearned Rent		6,705.00
12	Common Stock		74,530.00
13	Retained Earnings		146,290.00
14	Dividends	14,690.00
15	Fees Earned		328,600.00
16	Salaries and Wages Expense	198,220.00
17	Utilities Expense	42,120.00
18	Advertising Expense	22,315.00
19	Repairs Expense	17,210.00
20	Miscellaneous Expense	6,205.00
21	Totals	752,325.00	752,325.00

The data needed to determine year-end adjustments are as follows:

a.	Unexpired insurance at August 31, $5,860.
b.	Supplies on hand at August 31, $545.
c.	Depreciation of building for the year, $7,985.
d.	Depreciation of equipment for the year, $4,080.
e.	Rent unearned at August 31, $1,145.
f.	Accrued salaries and wages at August 31, $3,490.
g.	Fees earned but unbilled on August 31, $11,640.

	Required:
1.	Journalize the adjusting entries using the following additional accounts: Salaries and Wages Payable; Rent Revenue; Insurance Expense; Depreciation Expense—Building; Depreciation Expense—Equipment; and Supplies Expense. Refer to the Chart of Accounts for exact wording of account titles.
2.	Determine the balances of the accounts affected by the adjusting entries, and prepare an adjusted trial balance.

Chart of Accounts

CHART OF ACCOUNTS
Rowland Company
General Ledger
ASSETS 11 Cash 12 Accounts Receivable 13 Prepaid Insurance 14 Supplies 15 Land 16 Building 17 Accumulated Depreciation-Building 18 Equipment 19 Accumulated Depreciation-Equipment LIABILITIES 21 Accounts Payable 22 Unearned Rent 23 Salaries and Wages Payable EQUITY 31 Common Stock 32 Retained Earnings 33 Dividends	REVENUE 41 Fees Earned 42 Rent Revenue EXPENSES 51 Salaries and Wages Expense 52 Utilities Expense 53 Advertising Expense 54 Repairs Expense 55 Depreciation Expense-Building 56 Depreciation Expense-Equipment 57 Insurance Expense 58 Supplies Expense 59 Miscellaneous Expense

Journal

1. Journalize the adjusting entries using the following additional accounts: Salaries and Wages Payable; Rent Revenue; Insurance Expense; Depreciation Expense—Building; Depreciation Expense—Equipment; and Supplies Expense. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1		Adjusting Entries
2
3
4
5
6
7
8
9
10
11
12
13
14
15

Adjusted Trial Balance

2. Determine the balances of the accounts affected by the adjusting entries, and prepare an adjusted trial balance.

Rowland Company

ADJUSTED TRIAL BALANCE

August 31, 2018

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash
2	Accounts Receivable
3	Prepaid Insurance
4	Supplies
5	Land
6	Building
7	Accumulated Depreciation-Building
8	Equipment
9	Accumulated Depreciation-Equipment
10	Accounts Payable
11	Unearned Rent
12	Salaries and Wages Payable
13	Common Stock
14	Retained Earnings
15	Dividends
16	Fees Earned
17	Rent Revenue
18	Salaries and Wages Expense
19	Utilities Expense
20	Advertising Expense
21	Repairs Expense
22	Depreciation Expense-Building
23	Depreciation Expense-Equipment
24	Insurance Expense
25	Supplies Expense
26	Miscellaneous Expense
27	Totals

Answer 1

Rowland Company

1. Adjusting Entries:

Date	Account Titles and Explanation	Ref. No.	Debit	Credit
31-Aug	Insurance Expense		$1,215
	Prepaid Insurance			$1,215
	(To record prepaid insurance expired during the period)
b.	Supplies Expense		$1,745
	Supplies			$1,745
	(To record cost of supplies used during the period)
c.	Depreciation Expense - Building		$7,985
	Accumulated Depreciation - Building			$7,985
	(To record depreciation expense on building)
d.	Depreciation Expense - Equipment		$4,080
	Accumulated Depreciation - Equipment			$4,080
	(To record depreciation expense on equipment)
e.	Unearned Rent		$5,560
	Rent Revenue			$5,560
	(To record rent earned during the period)
f.	Salaries and Wages Expense		$3,490
	Salaries and Wages Payable			$3,490
	(To record unpaid salaries and wages)
g.	Accounts Receivable		$11,640
	Fees Earned			11,640
	(To record fees earned)

Balances of the accounts affected by the adjusting entries -
1. Insurance expense = $1,215
2. Prepaid Insurance = $5,860
3. Supplies expense = $1,745
4 . Supplies = $545
5. Depreciation expense - buildings = $7,985
6. Accumulated depreciation - buildings = $95,890
beginning balance = $87,905
add: dep. Expense = $7,985
7. Depreciation expense - equipment = $4,080
8. Accumulated dep. Equipment - = $100,515
beginning balance = $96,435
add: dep. Expense = $4,080
9. Rent Revenue = $5,560
10. Unearned rent = $1,145
11. Salaries and wages expense = $201,710
beginning balance = $198,220
add: salaries and wages payable = $3,490
12. Salaries and Wages Payable = $3,490
13. Accounts Receivable =$49,985
Beginning balance = $38,345
Add: fee earned but unbilled =$11,640
14. Fee earned = $340,240
beginning balance = $328,600
Add: unbilled = 11,640

1. Adjusted Trial Balance:

	Rowland Company
	Adjusted Trial Balance
	as on August 31, 2018
	Account Title	Debit	Credit
1	Cash	$7,655
2	Accounts Receivable	$49,985
3	Prepaid Insurance	$5,860
4	Supplies	$545
5	Land	$113,500
6	Building	$149,450
7	Accumulated Depreciation - Building		$95,890
8	Equipment	$133,250
9	Accumulated Depreciation - Equipment		$100,515
10	Accounts Payable		$11,860
11	Unearned Rent		$1,145
12	Salaries and Wages Payable		$3,490
13	Common Stock		$74,530
14	Retained Earnings		$146,290
15	Dividends	$14,690
16	Fees Earned		$340,240
17	Rent Revenue		$5,560
18	Salaries and Wages Expense	$201,710
19	Utilities Expense	$42,120
20	Advertising Expense	$22,315
21	Repairs Expense	$17,210
22	Depreciation Expense - Building	$7,985
23	Depreciation Expense - Equipment	$4,080
24	Insurance Expense	$1,215
25	Supplies Expense	$1,745
26	Miscellaneous Expense	$6,205
27	Totals	$779,520	$779,520