Question 4

Al-Hijrah Company prepares monthly financial statements. Below are the listed account balances in the Trial Balance at December 31, 2016 before any adjustments have been made for the month of December.

SCOTSMAN COMPANY

Trial Balance

December 31, 2016

Debit Credit

Supplies.................................................................................................... $ 3,200

Prepaid Insurance.................................................................................... 4,200

Equipment................................................................................................ 16,200

Accumulated DepreciationEquipment................................................. $6,000

Unearned Rent Revenue.......................................................................... 1,200

Accounts Payable..................................................................................... 5,000

Owners Equity........................................................................................ 11,400

Totals................................................................................................... 23,600 23,600

An analysis of the account balances by the company's accountant provided the following additional information:

1. A physical count of supplies revealed $1,000 on hand on December 31.

2. A two-year life insurance policy was purchased on September 1 for $4,800.

3. Equipment depreciated $3,000 per year.

4. The amount of rent received in advance that remains unearned at December 31is $500.

Instructions:

1. Using the above additional information, prepare the adjusting entries that should be made by Scotsman Company on December 31, 2016. (4 marks)
2. Prepare an adjusted trial balance at December 31, 2016. (6 marks)