Question
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
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.
Cash | $2,150 | Accounts Payable | $2,710 | |
Accounts Receivable | 3,600 | Unearned Photography Fees | 2,600 | |
Prepaid Rent | 12,600 | Common Stock | 24,000 | |
Prepaid Insurance | 2,970 | Photography Fees Earned | 34,480 | |
Supplies | 5,250 | Wages Expense | 11,000 | |
Equipment | 22,800 | Utilities Expense | 3,420 |
An analysis of the firm's records discloses the following items:
- 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.
- The equipment, purchased January 1, has an estimated life of 10 years.
- Utilities expense for December is estimated to be $750 but the bill will not arrive until January of next year.
- The balance in Prepaid Rent represents the amount paid on January 1, for a 2 year lease on the studio.
- 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.
- A 3 year insurance premium paid on January 1, was debited to Prepaid Insurance.
- Supplies on hand at December 31 are $1,750.
- 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 Images unadjusted account balances by preparing an unadjusted trail balance as of December 31.
IMAGE, Inc. Unadjusted Trial Balance December 31 | |||||
---|---|---|---|---|---|
Debit | Credit | ||||
Cash | |||||
Accounts Receivable | |||||
Prepaid Rent | |||||
Prepaid Insurance | |||||
Supplies | |||||
Equipment | |||||
Accounts Payable | |||||
Unearned Photography Fees | |||||
Common Stock | |||||
Photography Fees Earned | |||||
Wages Expense | |||||
Utilities Expense | |||||
Totals |
b. Record adjusting entries in the general journal.
General Journal | |||||
---|---|---|---|---|---|
Date | Description | Ref. | Debit | Credit | |
Dec. | 31 | Accumulated Depreciation - EquipmentAdvertising ExpenseDepreciation ExpenseFees ReceivableInsurance ExpenseInterest ExpenseInterest PayablePhotography Fees EarnedPrepaid AdvertisingPrepaid InsurancePrepaid RentRent ExpenseSuppliesSupplies ExpenseUnearned Photography FeesUtilities ExpenseUtilities PayableWages ExpenseWages Payable | (1) | ||
Accumulated Depreciation - EquipmentAdvertising ExpenseDepreciation ExpenseFees ReceivableInsurance ExpenseInterest ExpenseInterest PayablePhotography Fees EarnedPrepaid AdvertisingPrepaid InsurancePrepaid RentRent ExpenseSuppliesSupplies ExpenseUnearned Photography FeesUtilities ExpenseUtilities PayableWages ExpenseWages Payable | |||||
To record revenue earned but not billed. | |||||
31 | Accumulated Depreciation - EquipmentAdvertising ExpenseDepreciation ExpenseFees ReceivableInsurance ExpenseInterest ExpenseInterest PayablePhotography Fees EarnedPrepaid AdvertisingPrepaid InsurancePrepaid RentRent ExpenseSuppliesSupplies ExpenseUnearned Photography FeesUtilities ExpenseUtilities PayableWages ExpenseWages Payable | (2) | |||
Accumulated Depreciation - EquipmentAdvertising ExpenseDepreciation ExpenseFees ReceivableInsurance ExpenseInterest ExpenseInterest PayablePhotography Fees EarnedPrepaid AdvertisingPrepaid InsurancePrepaid RentRent ExpenseSuppliesSupplies ExpenseUnearned Photography FeesUtilities ExpenseUtilities PayableWages ExpenseWages Payable | |||||
To record depreciation for the year. | |||||
31 | Accumulated Depreciation - EquipmentAdvertising ExpenseDepreciation ExpenseFees ReceivableInsurance ExpenseInterest ExpenseInterest PayablePhotography Fees EarnedPrepaid AdvertisingPrepaid InsurancePrepaid RentRent ExpenseSuppliesSupplies ExpenseUnearned Photography FeesUtilities ExpenseUtilities PayableWages ExpenseWages Payable | (3) | |||
Accumulated Depreciation - EquipmentAdvertising ExpenseDepreciation ExpenseFees ReceivableInsurance ExpenseInterest ExpenseInterest PayablePhotography Fees EarnedPrepaid AdvertisingPrepaid InsurancePrepaid RentRent ExpenseSuppliesSupplies ExpenseUnearned Photography FeesUtilities ExpenseUtilities PayableWages ExpenseWages Payable | |||||
To record estimated December utilities expense. | |||||
31 | Accumulated Depreciation - EquipmentAdvertising ExpenseDepreciation ExpenseFees ReceivableInsurance ExpenseInterest ExpenseInterest PayablePhotography Fees EarnedPrepaid AdvertisingPrepaid InsurancePrepaid RentRent ExpenseSuppliesSupplies ExpenseUnearned Photography FeesUtilities ExpenseUtilities PayableWages ExpenseWages Payable | (4) | |||
Accumulated Depreciation - EquipmentAdvertising ExpenseDepreciation ExpenseFees ReceivableInsurance ExpenseInterest ExpenseInterest PayablePhotography Fees EarnedPrepaid AdvertisingPrepaid InsurancePrepaid RentRent ExpenseSuppliesSupplies ExpenseUnearned Photography FeesUtilities ExpenseUtilities PayableWages ExpenseWages Payable | |||||
To record rent expense for the year. | |||||
31 | Accumulated Depreciation - EquipmentAdvertising ExpenseDepreciation ExpenseFees ReceivableInsurance ExpenseInterest ExpenseInterest PayablePhotography Fees EarnedPrepaid AdvertisingPrepaid InsurancePrepaid RentRent ExpenseSuppliesSupplies ExpenseUnearned Photography FeesUtilities ExpenseUtilities PayableWages ExpenseWages Payable | (5) | |||
Accumulated Depreciation - EquipmentAdvertising ExpenseDepreciation ExpenseFees ReceivableInsurance ExpenseInterest ExpenseInterest PayablePhotography Fees EarnedPrepaid AdvertisingPrepaid InsurancePrepaid RentRent ExpenseSuppliesSupplies ExpenseUnearned Photography FeesUtilities ExpenseUtilities PayableWages ExpenseWages Payable | |||||
To record advance payments earned during the year. | |||||
31 | Accumulated Depreciation - EquipmentAdvertising ExpenseDepreciation ExpenseFees ReceivableInsurance ExpenseInterest ExpenseInterest PayablePhotography Fees EarnedPrepaid AdvertisingPrepaid InsurancePrepaid RentRent ExpenseSuppliesSupplies ExpenseUnearned Photography FeesUtilities ExpenseUtilities PayableWages ExpenseWages Payable | (6) | |||
Accumulated Depreciation - EquipmentAdvertising ExpenseDepreciation ExpenseFees ReceivableInsurance ExpenseInterest ExpenseInterest PayablePhotography Fees EarnedPrepaid AdvertisingPrepaid InsurancePrepaid RentRent ExpenseSuppliesSupplies ExpenseUnearned Photography FeesUtilities ExpenseUtilities PayableWages ExpenseWages Payable | |||||
To record insurance expense for the year. | |||||
31 | Accumulated Depreciation - EquipmentAdvertising ExpenseDepreciation ExpenseFees ReceivableInsurance ExpenseInterest ExpenseInterest PayablePhotography Fees EarnedPrepaid AdvertisingPrepaid InsurancePrepaid RentRent ExpenseSuppliesSupplies ExpenseUnearned Photography FeesUtilities ExpenseUtilities PayableWages ExpenseWages Payable | (7) | |||
Accumulated Depreciation - EquipmentAdvertising ExpenseDepreciation ExpenseFees ReceivableInsurance ExpenseInterest ExpenseInterest PayablePhotography Fees EarnedPrepaid AdvertisingPrepaid InsurancePrepaid RentRent ExpenseSuppliesSupplies ExpenseUnearned Photography FeesUtilities ExpenseUtilities PayableWages ExpenseWages Payable | |||||
To record supplies expense for the year. | |||||
31 | Accumulated Depreciation - EquipmentAdvertising ExpenseDepreciation ExpenseFees ReceivableInsurance ExpenseInterest ExpenseInterest PayablePhotography Fees EarnedPrepaid AdvertisingPrepaid InsurancePrepaid RentRent ExpenseSuppliesSupplies ExpenseUnearned Photography FeesUtilities ExpenseUtilities PayableWages ExpenseWages Payable | (8) | |||
Accumulated Depreciation - EquipmentAdvertising ExpenseDepreciation ExpenseFees ReceivableInsurance ExpenseInterest ExpenseInterest PayablePhotography Fees EarnedPrepaid AdvertisingPrepaid InsurancePrepaid RentRent ExpenseSuppliesSupplies ExpenseUnearned Photography FeesUtilities ExpenseUtilities PayableWages ExpenseWages Payable | |||||
To record unpaid wages at December 31. |
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