Understanding the Mechanics of Accounting As the CFO (chief financial officer) of Rollins Engineering Company, you are looking for someone to fill the position of office manager. Part of the job description is to maintain the company’s accounting records. This means that the office manager must be able to journalize transactions, post them to the ledger accounts, and prepare monthly trial balances. You have just interviewed the first applicant, Jay McMahon, who claims that he has studied accounting.

As an initial check on his understanding of the basic mechanics of accounting, you give Jay a list of accounts randomly ordered and with assumed balances and ask him to prepare a trial balance. Jay prepares the following.

Based solely on your assessment of Jay McMahon’s understanding of accounting, would you hire him as office manager? Explain. Prepare a corrected trial balance that you can use as a basis for your discussion with Jay and future applicants. Explain how the basic accounting equation and the system of double-entry accounting provide a check on the accounting records.

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Trial Balance Debits Credits $ 4,500 Accounts Payable Salaries Expense Consulting Revenues Cash Utilities Expense Accounts Receivable Supplies Rent Expense. 175,000 $269,000 82,100 12,000 44,000 11,000 30,000 Capital Stock 77,000 Supplies Expense 33,000 Office Equipment 15,000 Retained Earnings 24,000 Other Expenses 6,400 Salaries Payable 34,000 Totals $492,500 $324,500