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	7,565.00
2	Accounts Receivable	38,860.00
3	Prepaid Insurance	7,310.00
4	Supplies	2,435.00
5	Land	117,450.00
6	Building	153,100.00
7	Accumulated Depreciation-Building		87,230.00
8	Equipment	137,150.00
9	Accumulated Depreciation-Equipment		99,160.00
10	Accounts Payable		12,005.00
11	Unearned Rent		6,425.00
12	Common Stock		74,720.00
13	Retained Earnings		156,765.00
14	Dividends	14,500.00
15	Fees Earned		327,050.00
16	Salaries and Wages Expense	196,570.00
17	Utilities Expense	42,485.00
18	Advertising Expense	22,730.00
19	Repairs Expense	17,280.00
20	Miscellaneous Expense	5,920.00
21	Totals	763,355.00	763,355.00

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

a.	Unexpired insurance at August 31, $5,985.
b.	Supplies on hand at August 31, $470.
c.	Depreciation of building for the year, $7,900.
d.	Depreciation of equipment for the year, $4,590.
e.	Rent unearned at August 31, $1,560.
f.	Accrued salaries and wages at August 31, $3,085.
g.	Fees earned but unbilled on August 31, $11,010.

	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.

Answer 1

1) Adjusting entries

No	Account and explanation	debit	credit
1	Insurance expense (7310-5985)	1325
	Prepaid insurance		1325
	(To record insurance expired)
2	Supplies expense (2435-470)	1965
	Supplies		1965
	(To record supplies adjusted)
c	Depreciation expense	7900
	Accumulated depreciation-building		7900
	(To record dep)
d	Depreciation expense	4590
	Accumulated depreciation-equipment		4590
	(To record dep)
e	Unearned rent (6425-1560)	4865
	Rent revenue		4865
	(To record rent revenue)
f	Salaries and wages expense	3085
	Salaries and wages payable		3085
	(To record accrued salaries and wages)
g	Account receivable	11010
	Fees earned		11010
	(To record fees earned)

2) Trial balance

	Debit	Credit
Cash	7565
Account receivable	49870
Supplies	470
Prepaid insurance	5985
Land	117450
Building	153100
Accumulated Depreciation-Building		95130
Equipment	137150
Accumulated Depreciation-Equipment		103750
Account payable		12005
Unearned rent		1560
Salaries and wages payable		3085
Common Stock		74720
Retained Earnings		156765
Dividend	14500
Fees earned		338060
Rent revenue		4865
Salaries and Wages Expense	199655
Utilities expense	42485
Advertising Expense	22730
Repairs expense	17280
Miscellaneous Expense	5920
Insurance expense	1325
Supplies expense	1965
Depreciation expense -Building	7900
Depreciation expense-equipment	4590
TOTAL	789940	789940