Unadjusted trial balance appeared as follows:

The Cutlery
Trial Balance
August 31 ,2000
Account	Debit	Credit
Cash	$ 4,950
Accounts receivable	$ -
Prepaid Insurance	$ 2,400
Furniture	$ 2,000
Store Equipment	$ 31,000
Accounts Payable		$ 14,450
Unearned haircuting - Service revenue		$ 500
Joanne cardinal - Capital		$ 26,000
Joanne cardinal - Withdrawals	$ 500
Hair cutting services revenue		$ 3,800
Wages Expense	$ 250
Rent Expense	$ 3,200
Hydro Expense	$ 450
	$ 44,750	$ 44,750

The following additional information is available for the month just ended:

a) Depreciation of $100 per month will be taken on the furniture

b) It is estimated that the store equipment will have a $1.000 value at the end of its estimated five- year (60 months) useful life. Joanne Cardinal will record a full month of depreciation for August.

c) It was determined that the balance in unearned haircutting services revenue at August 31 should be $420

d) The prepaid insurance represents six months of insurance beginning August 1

e) On august 31. The cutlery provided $130 of services to a client who will pay in September

f) On august 31. The company received the business August cell phone bill totalling $50. It will be paid in September.

Required

1. Prepare the adjusting entries needed on August 31, to record the previously unrecorded items

2. Prepare T Accounts for accounts affected by the adjusting entries. Post the adjusting entries to the T accounts

3. Prepare an adjusted trial balance

4. Prepare an income statement. Statement of change in equity and a balance sheet

Planning the solutions

Analyze the information for each situation to determine which accounts need to be updated with an adjustment

Calculate the dollar amount of each adjustment and prepare the necessary journal entries

Show the amount entered by each adjustment in the designated accounts and determine the adjusted balance.

Determine each entrys effect on profit for the year end on total assets, total liabilities, and equity at the end of the year

Using the adjusted balances, prepare an adjusted trial balance

Using the adjusted trial balance, prepare the income statement, statement of change in equity, and balance sheet.

Analyze the adjusting entries and calculate the effect on each component of the accounting equation