Question

At the end of 2016, Richards Company prepared a trial balance, recorded and posted its adjusting entries, and then prepared an adjusted trial balance. Selected accounts and account balances from the trial balance and adjusted trial balance are as follows:

Partial Trial Balance

Partial Adjusted Trial Balance

(Debit)

(Credit)

(Debit)

(Credit)

Depreciation Expense $0 $3,960

Interest Payable $0 $810

Bad Debts Expense 0 410

Utilities Expense 1,480 1,682

Rental Revenue 1,650 2,635

Income Tax Expense 0 2,740

Prepaid Insurance 1,742 1,380

Office Salaries Payable 0 540

Rent Expense 0 800

Accumulated Depreciation 14,820 18,780

Interest Receivable 0 320

Prepaid Rent 1,600 800

Office Salaries Expense 5,600 6,140

Income Taxes Payable 0 2,740

Insurance Expense 300 662

Allowance for Doubtful Accounts 130 540

Interest Expense 0 810

Unearned Rent 600 0

Utilities Payable 0 202

Interest Revenue 620 940

Sales Salaries Expense 7,300 7,850

Office Supplies 1,150 700

Rent Receivable 0 385

Advances to Salespersons 770 220

Office Supplies Expense 0 450

Additional information:

1. Interest Receivable is due March 1, 2017

2. Interest Payable is due May 14, 2018

Required:

1. By comparing the partial trial balance to the partial adjusted trial balance, determine the adjusting entries that the company made on December 31, 2016. Prepare your answers in general journal form.

2. Assuming that the company uses reversing entries, indicate which adjusting entries should be reversed.

Answer 1

1	The following are the adjustment entries RC made Dec 31 2016
	Date	Particulars	Dr Amount	Cr Amount
	Dec-16	Depreciation Exp	$3,960
		To Accumulated Dep		$3,960
		to record the adjustment entry made for depreciation
	Dec-16	Interest Exp	$810
		To Interest payable		$810
		to record at which is not yet paid will be credited
	Dec-16	Bad Debts	$410
		To Allowance for Doubtful Debts		$410
		To record the bad debts allowed
	Dec-16	Utilities Exp	$202
		To Utilities payable		$202
		to record utilities exp
	Dec-16	Unearned rent	$600
		To Rent Revenue		$600
		to record unearned rent tr to rental revenue
	Dec-16	Rent Receivable	$385
		To Rent Revenue		$385
		to record rent
		receivable for the yr
	Dec-16	Income Tax Expenses	$2,740
		To Income tax Payable		$2,740
		To Record income tax payable for the yr
	Dec-16	Insurance Exp	$362
		To Prepaid Insurance		$362
		to record insurance
		expenses prepaid
	Dec-16	Office Salaries Exp	$540
		To Office Salaries Payable		$540
		to record office salaries payable for the yr
	Dec-16	Rent Exp	$800
		To prepaid Rent		$800
		being rent paid in advance
	Dec-16	Interest Receivable	$320
		To Interest Revenue		$320
		being interest receivable
	Dec-16	Sales Salaries Exp	$550
		To Advance to Sales persons		$550
		to record sales persons advances tr to salaries
	Dec-16	Office Supplies Exp	$450
		To office Supplies		$450
		to record the adjustment entry made for office supplies
2	Except adjustment entries for depreciation exp of $3960 ,bad debts exp of $410 and
	interest payable on May 14 2018
	all the remaining adjustment entries will be reversed on jan 2017
	Date	Particulars	Dr Amount	Cr Amount
	Jan-17	Utilities Payable	$202
		To Utilites Exp		$202
		Being utilities exp payable
	Jan-17	Rent revenue	$600
		To Unearned Rent		$600
		being unearned rent tr to rental revenue
	Jan-17	Rent revenue	$385
		To Rent Receivable		$385
		being rent receivable for the yr
	Jan-17	Income Tax payable	$2,740
		To income tax Exp		$2,740
		being the income tax payable for the yr