Trial Balance and Adjusting Entries Image, Inc., a commercial photography studio, has just completed its first full year of operations on December 31. The general ledger account balances before year-end adjustments follow. No adjusting entries have been made to the accounts at any time during the year. Assume that all balances are normal.

An analysis of the firm's records discloses the following items:
1. Photography services of \(\$ 1,250\) have been rendered, but customers have not yet been billed. The firm uses the account Fees Receivable to reflect amounts due but not yet billed.

2. The equipment, purchased January 1 , has an estimated life of 10 years.

3. Utilities expense for December is estimated to be \(\$ 750\), but the bill will not arrive until January of next year.

4. The balance in Prepaid Rent represents the amount paid on January 1, for a two-year lease on the studio.

5. In November, customers paid \(\$ 2,600\) in advance for pictures to be taken for the holiday season. When received, these fees were credited to Unearned Photography Fees. By December 31, all fees are earned.

6. A three-year insurance premium paid on January 1 was debited to Prepaid Insurance.

7. Supplies on hand at December 31 are \(\$ 1,750\).

8. At December 31, wages expense of \(\$ 650\) has been incurred but not paid.

Required

a. Prove that the sum of the debits equals the sum of the credits for Image's unadjusted account balances by preparing an unadjusted trial balance as of December 31 .

b. Record adjusting entries in the general journal.

Transcribed Image Text:

Cash... Accounts receivable. Prepaid rent.. Prepaid insurance. Supplies... Equipment $ 2,150 Accounts payable.... 3,600 Unearned photography fees.. Common stock.... 12,600 2,970 Photography fees earned. 5,250 Wages expense 22,800 Utilities expense. $ 2,710 2,600 24,000 34,480 11,000 3,420