Preparing an Unadjusted Trial Balance and Adjustments Snapshot Company, a commercial photography studio, has just completed its first full year of operations on December 31, 2015. 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. Cash $4,300 Accounts Payable $3,820 Accounts Receivable 7,600 Unearned Photography Fees 5,200 Prepaid Rent 25,200 Common Stock 48.000 Prepaid Insurance 5,940 Photography Fees Earned 68,960 Supplies 3,500 Wages Expense 22,000 Equipment 45,600 Utilities Expense 6,840 An analysis of the firm's records discloses the following, 1. Photography services of $1,850 have been rendered, but customers have not yet paid or been billed. The firm uses the account Fees Receivable to reflect amounts due but not yet billed. 2. Equipment, purchased January 1, 2015, has an estimated life of 10 years. 3. Utilities expense for December is estimated to be 5800, but the bill will not arrive or be paid until January of next year. 4. The balance in Prepaid Rent represents the amount paid on January 1, 2015, for a 2-year lease on the studio. 5. In November, customers paid $5,200 cash in advance for photos to be taken for the holiday season. When received, these fees were credited to Unearned Photography Fees, By December 31, all of these fees are earned. 6. A 3-year insurance premium paid on January 1, 2015, was debited to Prepaid Insurance. 7. Supplies available at December 31 are $3,040. 8. At December 31, wages expense of $750 has been incurred but not paid or recorded. (a) Prove that debits equal credits for Snapshot's unadjusted account balances by preparing its unadjusted trial balance at December 31, 2015. (a) Prove that debits equal credits for SnapShot's unadjusted account balances by preparing its unadjusted trial balance at December 31, 2015. Credit $ 0 0 0 0 0 Snapshot Company Unadjusted Trial Balance December 31, 2015 Debit Cash $ 4,300 Accounts Receivable 7,600 Prepaid Rent 25,200 Prepaid Insurance 5,940 Supplies 8,500 Equipment 45,600 Accounts Payable 0 Unearned Photography Fees 0 Common Stock 0 Photography Fees Earned 0 Wages Expense 22,000 Utilities Expense 6,840 Totals $ 125,980 O 3,820 5,200 48,000 68,960 0 0 $ 125,980 (b) Prepare its adjusting entries using the financial statement effects template. Income Statement Balance Sheet + Noncash Assets Contra Assets = Transaction Cash Asset Liabilities + Contributed Capital + Earned Capital + $ 0 + $ 0 x Revenue Expenses Net Income $ 0 + $ 1,850 $ 0 = $ 0 $ 1,850 $ 0 = $ 0 + 0 4,560 0 0 + + 0 X 0 4,560 0 + 0 0 800 + 0 + 0 X 0 800 0 + + 0 12,600 x 0 + 0 X O 12,600 (1) Fees earned but not received. (2) Recognize depreciation expense for one year. (3) Recognize utilities expense. (4) Recognize rent expense for one year. (5) Recognize photo revenues. (6) Recognize insurance expense. (7) Recognize supplies expense. (8) Recognize wages expense. Totals 0 + 0 - 0 (5,200) + 0 + OX 5,200 0 1,850 (4,560) (800) (12,600) 5,200 (1,980) (5,460) (750) (19,100) 0 + O + 0 x (1,980) (5,460) 0 0 + 0 + 0 + 1,980 5,460 O 0 x 0 0 + 0 0 750 + 0 + 0 x 0 750 0 7,010 x 4,560 (3,650) 0 + 0 x 7,050 26,150 II Debit Credit 1,850 0 0 1,850 4,560 0 0 4,560 > 800 0 0 800 12,600 0 (C) Prepare its adjusting entries in journal entry form. General Journal Date 2015 Description Dec 31 (1) Fees Receivable Photography Fees Earned To record revenue earned but not billed. 31 (2) Depreciation Expense Accumulated Depreciation To record depreciation for the year. 31 (3) Utilities Expense Utilities Payable To record estimated December utilities expense. 31 (4) Rent Expense Prepaid Rent To record rent expense for the year. 31 (5) Unearned Photography Fees Photography Fees Earned To record advanced payments earned during the year. 31 (6) Insurance Expense Prepaid Insurance To record insurance expense for the year. 31 (7) Supplies Expense - Supplies To record supplies expense for the year. 31 (8) Wages Expense - Wages Payable A To record unpaid wages at December 31. 0 12,600 > 5,200 0 0 5,200 1,980 > 0 0 1,980 5,460 0 0 5,460 > 750 0 0 750