QUESTION 4

The trial balances of Farro Company follow with the accounts arranged in alphabetic order:

Trial Balances

Unadjusted Adjusted Post-Closing

Accounts Payable...................................... $10,000 $10,000 $10,000

Accounts Receivable.................................. 2,200 3,200 3,200

Accumulated Depreciationequipment.... 13,000 17,000 17,000

Advertising Expense................................... 0 11,300 0

Cash.......................................................... 60,000 60,000 60,000

Depreciation Expense................................ 0 4,000 0

Equipment................................................. 75,000 75,000 75,000

Retained Earnings..................................... 82,200 82,200 102,400

Dividends.................................................. 16,000 16,000 0

Prepaid Advertising................................... 12,800 1,500 1,500

Prepaid Rent.............................................. 15,000 11,000 11,000

Rent Expense............................................. 0 4,000 0

Service Revenue......................................... 96,000 105,000 0

Supplies.................................................... 3,200 700 700

Supplies Expense....................................... 2,000 4,500 0

Unearned Revenue.................................... 23,000 15,000 15,000

Wages Expense.......................................... 38,000 45,000 0

Wages Payable.......................................... 0 7,000 7,000

Instructions

Analyze the data and prepare a) the adjusting entries and b) the closing entries made by Farro Company.