Question

Solve the following problem.

Charts 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

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	7,500.00
2	Accounts Receivable	38,400.00
3	Prepaid Insurance	7,200.00
4	Supplies	1,980.00
5	Land	112,500.00
6	Building	150,250.00
7	Accumulated Depreciation-Building		87,550.00
8	Equipment	135,300.00
9	Accumulated Depreciation-Equipment		97,950.00
10	Accounts Payable		12,150.00
11	Unearned Rent		6,750.00
12	Common Stock		75,000.00
13	Retained Earnings		146,000.00
14	Dividends	15,000.00
15	Fees Earned		324,600.00
16	Salaries and Wages Expense	193,370.00
17	Utilities Expense	42,375.00
18	Advertising Expense	22,800.00
19	Repairs Expense	17,250.00
20	Miscellaneous Expense	6,075.00
21	Totals	750,000.00	750,000.00

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

a.	Unexpired insurance at August 31, $6,000.
b.	Supplies on hand at August 31, $480.
c.	Depreciation of building for the year, $7,500.
d.	Depreciation of equipment for the year, $4,150.
e.	Rent unearned at August 31, $1,550.
f.	Accrued salaries and wages at August 31, $3,200.
g.	Fees earned but unbilled on August 31, $11,330.

	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

• All working forms part of the answer
• Requirement 1: Adjustment entries

Adjustment no.	Accounts title	Debit	Credit	Working (if any)
a.	Insurance Expense	$       1,200.00		Beginning bal - End bal: 7200 - 6000
	Prepaid Insurance		$       1,200.00
	(Insurance expired)
b.	Supplies Expense	$       1,500.00		Beginning bal - End bal: 1980 - 480
	Supplies		$       1,500.00
	(Supplies consumed)
c.	Depreciation Expense-Building	$       7,500.00
	Accumulated Depreciation-Building		$       7,500.00
	(Building depreciated)
d.	Depreciation Expense-Equipment	$       4,150.00
	Accumulated Depreciation-Equipment		$       4,150.00
	(Equipment depreciated)
e.	Unearned Rent	$       5,200.00		Beginning bal - End bal: 6750 - 1550
	Rent Revenue		$       5,200.00
	(Rent revenue now earned)
f.	Salaries and Wages Expense	$       3,200.00
	Salaries & Wages Payable		$       3,200.00
	(Wages due but not paid)
g.	Accounts Receivable	$     11,330.00
	Fees Earned		$    11,330.00
	(Fees earned and due from clients)

• Requirement 2: Adjusted Trial Balance, (including Unadjusted and Adjustment columns for understanding)

	Unadjusted Trial Balance		Adjustments		Adjusted Trial Balance
ACCOUNT TITLE	DEBIT	CREDIT	DEBIT	CREDIT	DEBIT	CREDIT
Cash	$               7,500.00				$             7,500.00
Accounts Receivable	$            38,400.00		$         11,330.00		$           49,730.00
Prepaid Insurance	$               7,200.00			$           1,200.00	$             6,000.00
Supplies	$               1,980.00			$           1,500.00	$                 480.00
Land	$          112,500.00				$        112,500.00
Building	$          150,250.00				$        150,250.00
Accumulated Depreciation-Building		$                  87,550.00		$           7,500.00		$        95,050.00
Equipment	$          135,300.00				$        135,300.00
Accumulated Depreciation-Equipment		$                  97,950.00		$           4,150.00		$      102,100.00
Accounts Payable		$                  12,150.00				$        12,150.00
Unearned Rent		$                     6,750.00	$            5,200.00			$          1,550.00
Salaries & Wages Payable				$           3,200.00		$          3,200.00
Common Stock		$                 75,000.00				$        75,000.00
Retained Earnings		$                146,000.00				$      146,000.00
Dividends	$            15,000.00				$           15,000.00
Fees Earned		$                324,600.00		$         11,330.00		$      335,930.00
Rent Revenue				$           5,200.00		$          5,200.00
Salaries and Wages Expense	$          193,370.00		$            3,200.00		$        196,570.00
Utilities Expense	$            42,375.00				$           42,375.00
Advertising Expense	$            22,800.00				$           22,800.00
Repairs Expense	$            17,250.00				$           17,250.00
Depreciation Expense-Building			$            7,500.00		$             7,500.00
Depreciation Expense-Equipment			$            4,150.00		$             4,150.00
Insurance Expense			$            1,200.00		$             1,200.00
Supplies Expense			$            1,500.00		$             1,500.00
Miscellaneous Expense	$               6,075.00				$             6,075.00
TOTALs	$          750,000.00	$                750,000.00	$         34,080.00	$         34,080.00	$        776,180.00	$      776,180.00