Question

The unadjusted trial balance as of December 31, 2018, for the Bagley Consulting Company appears below. December 31 is the company’s fiscal year-end.

Account Title	Debits		Credits
Cash	5,850
Accounts receivable	7,000
Prepaid insurance	2,800
Land	195,000
Buildings	52,500
Accumulated depreciation—buildings			21,000
Office equipment	84,000
Accumulated depreciation—office equipment			33,600
Accounts payable			27,800
Salaries and wages payable			0
Deferred rent revenue			0
Common stock			200,000
Retained earnings			45,600
Sales revenue			77,500
Interest revenue			3,600
Rent revenue			4,200
Salaries and wages expense	29,000
Depreciation expense	0
Insurance expense	0
Utility expense	19,700
Maintenance expense	17,450
Totals	413,300		413,300

The buildings have an estimated useful life of 50 years with no salvage value. The company uses the straight-line depreciation method.

The office equipment is depreciated at 10 percent of original cost per year.

Prepaid insurance expired during the year, $1,400.

Accrued salaries and wages at year-end, $1,100.

Deferred rent revenue at year-end should be $650.

Required:
1. From the trial balance and information given, prepare adjusting entries.
2. Post the beginning balances and adjusting entries into the appropriate t-accounts.
3. Prepare an adjusted trial balance.
4. Prepare closing entries.
5. Prepare a post-closing trial balance.

Answer 1

Answer:		Unadjusted		Adjusted		Post closing
Requirement 3, 5	Account Title	Debits	Credits	Debits	Credits	Debits	Credits
	Cash	5,850		5,850		5,850
	Accounts receivable	7,000		7,650		7,650
	Prepaid insurance	2,800		1,400		1,400
	Land	1,95,000		1,95,000		1,95,000
	Buildings	52,500		52,500		52,500
	Accumulated depreciation—buildings		21,000		22,050		22,050
	Office equipment	84,000		84,000		84,000
	Accumulated depreciation—office equipment		33,600		42,000		42,000
	Accounts payable		27,800		27,800		27,800
	Salaries and wages payable		0		1100		1100
	Deferred rent revenue		0		650		650
	Common stock		2,00,000		2,00,000		2,00,000
	Retained earnings		45,600		45,600		52,800
	Sales revenue		77,500		77,500
	Interest revenue		3,600		3,600
	Rent revenue		4,200		4,200
	Salaries and wages expense	29,000		30,100
	Depreciation expense	0		9450
	Insurance expense	0		1400
	Utility expense	19,700		19,700
	Maintenance expense	17,450		17,450
	Totals	4,13,300	4,13,300	4,24,500	4,24,500	3,46,400	3,46,400
Requirement 1	Journal Entries
Date	Accounts title and explanation	Debit	Credit
a.	Depreciation expenses	$                           1,050		(52,500/50)
	Accumulated depreciation-Building		$                                      1,050
	(Being depreciation recorded on building)
b.	Depreciation expenses	$                           8,400		(84,000*10%)
	Accumulated depreciation-Office Equipment		$                                      8,400
	(Being depreciation recorded on equipment)
c.	Insurance expense	$                           1,400
	Prepaid expense		$                                      1,400
	(Being prepaid insurance expires and recorded as expense)
d.	Salaries and wages expense	$                           1,100
	Salaries and wages payable		$                                      1,100
	(Being accrued salaries recorded )
e.	Deferred rent revenue	$                              650
	Rent revenue		$                                         650
	(To record deferred rent revenue)
Requirement 2	T-accounts
	Cash
	Bal.	5850
	Accounts receivable
	Bal.	7000
	Prepaid Insurance
	Bal.	2800		1400
	End. Bal	1400
	Land
	Bal.	1,95,000
	Building
	Bal.	52500
	Accumulated Depreciation-Building
			Bal.	21000
				1050
			End. Bal	22050
	Office Equipment
	Bal.	84000
	Accumulated Depreciation-Office Equipment
			Bal.	33600
				8400
			End. Bal	42000
	Accounts Payable
			Bal.	27800
	Salaries and wages payable
				1100
	Deferred rent revenue
		650
	Common Stock
			Bal.	2,00,000
	Retained earning
			Bal.	45600
	Sales Revenue
			Bal.	77500
	Interest Revenue
			Bal.	3600
	Rent revenue
			Bal.	4200
	Salaries and wages expense
	Bal	29000
		1100
	End Bal.	30100
	Depreciation expense
		$                           1,050
		$                           8,400
	End. Bal	$                           9,450
	Insurance Expense
		1400
	Utilities Expense
	Bal.	19700
	Maintenance expense
	Bal.	17450
Requirement 4	Journal Entries
Date	Accounts title and explanation
	Sales Revenue	77500
	Interest Revenue	3600
	Rent Revenue	4200
	Income Summary		85300
	(To transfer revenue to income summary account)
	Income Summary	78,100
	Salaries and wages expense		30,100
	Depreciation expense		9,450
	Insurance expense		1,400
	Utility expense		19,700
	Maintenance expense		17,450
	(To transfer expenses to income summary)
	Income Summary	7,200
	Retained Earning		7,200