Use of a Trial Balance as a Basis for Adjusting Entries Lori Matlock operates a graphic arts business. A trial balance on June 30, 2008, before recording any adjusting entries, appears as follows:

Required 1. Prepare in general journal form the necessary adjusting entries at June 30, 2008. Label the entries

(a) through

(e) to correspond to the other data.
2. Note that the unadjusted trial balance reports a credit balance in Accumulated Depreciation—
Equipment of $4,000. Explain why the account contains a balance of $4,000 on June 30, 2008.

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Other Data Matlock Graphic Arts Studio Unadjusted Trial Balance June 30, 2008 Debit Credit Cash Prepaid Rent Supplies Office Equipment Accounts Payable Notes Payable Capital Stock $ 7,000 18,000 15,210 46,120 Accumulated Depreciation-Equipment $ 4,000 1,800 2,000 50,000 Retained Earnings Dividends Revenue 24,350 8,400 46,850 Utilities Expense 2,850 Salaries Expense 19,420 Advertising Expense 12,000 Totals $129,000 $129,000 a. The monthly rent is $600. b. Supplies on hand on June 30, 2008, amount to $1,290. c. The office equipment was purchased on June 1, 2007. On that date, it had an estimated useful life of ten years and a salvage value of $6,120. d. Interest owed on the note payable but not yet paid amounts to $50. e. Salaries of $620 are owed but unpaid to employees at the end of the month.