4A-23 4A-7. The unadjusted trial balance of OLYMPIA Corporation as of November 3

Question

4A-23 4A-7. The unadjusted trial balance of OLYMPIA Corporation as of November 30, 20x1, is shown on the next page. Data needed for the end-of-month adjustments is as follows: Adjustment information: a. Remaining prepaid rent on November 30 is $1,400. b. Supplies on hand at the end of the month were $200 c. Monthly depreciation was $2,600. d. Additional accrued salary expense at the end of the month was $4,000. e. $2,300 of commission revenue remained unearned at the end of the month. f. Additional interest accrued on money borrowed from the bank by Olympia was $800 as of the end of the month. Required: 1. Open the ledger accounts listed in the trial balance in T-account format showing the beginning account balances as given. Make the adjusting entries to these accounts using the appropriate letter to mark each entry. 2. Make the closing entries to the T-accounts, using appropriate letters to mark each one, and calculate the ending balances for each account. 3. Prepare the income statement, balance sheet, and statement of changes itn retained earnings for OLYMPIA

Explanation / Answer

T-Account Cash Accounts receivable Description Debit Credit Description Debit Credit Unadjusted Balance $2,900 Unadjusted Balance $12,000 Adjusted Balance $2,900 Adjusted Balance $12,000 Prepaid Rent Supplies Description Debit Credit Description Debit Credit Unadjusted Balance $3,100 Unadjusted Balance $700 a Rent expense $1,700 (3100-1400) b Supplies expense $500 (700-200) Adjusted Balance $1,400 Adjusted Balance $200 Equipment Accumulated Depreciation-Equipment Description Debit Credit Description Debit Credit Unadjusted Balance $27,500 Unadjusted Balance $4,000 Adjusted Balance $27,500 c Depreciation expense $2,600 Adjusted Balance $6,600 Salaries Payable Interest Payable Description Debit Credit Description Debit Credit Unadjusted Balance $0 Unadjusted Balance $2,600 d Salaries expense $4,000 f Interest expense $800 Adjusted Balance $4,000 Adjusted Balance $3,400 Unearned Commission revenue Common stock Description Debit Credit Description Debit Credit Unadjusted Balance $5,100 Unadjusted Balance $20,000 e Commission revenue $2,800 (5100-2300) Adjusted Balance $20,000 Adjusted Balance $2,300 Retained earnings Dividends Description Debit Credit Description Debit Credit Unadjusted Balance $14,000 Unadjusted Balance $3,500 Adjusted Balance $14,000 Adjusted Balance $3,500 Commission Revenue Supplies expense Description Debit Credit Description Debit Credit Unadjusted Balance $6,700 Unadjusted Balance $0 e Unearned commission revenue $2,800 b Supplies $500 Adjusted Balance $9,500 Adjusted Balance $500 Salary Expense Rent Expense Description Debit Credit Description Debit Credit Unadjusted Balance $1,800 Unadjusted Balance $0 d Salaries payable $4,000 a Prepaid Rent $1,700 Adjusted Balance $5,800 Adjusted Balance $1,700 Interest expense Advertising expense Description Debit Credit Description Debit Credit Unadjusted Balance $0 Unadjusted Balance $900 f Interest payable $800 Adjusted Balance $900 Adjusted Balance $800 Depreciation expense-Equipment Description Debit Credit Unadjusted Balance $0 c Accumulated depreciation $2,600 Adjusted Balance $2,600 TRIAL BALANCE ADJUSTMENTS ADJUSTED TRIALBALANCE UNADJSTED BALANCE Debit Credit Debit Credit Account Debit Credit Cash $2,900 Cash $2,900 Accounts receivable $12,000 Accounts receivable $12,000 Prepaid Rent $3,100 $1,700 Prepaid Rent $1,400 Supplies $700 $500 Supplies $200 Equipment $27,500 Equipment $27,500 Accumulated Depreciation-Equipment $4,000 $2,600 Accumulated Depreciation-Equipment $6,600 Salaries Payable $0 $4,000 Salaries Payable $4,000 Interest Payable $2,600 $800 Interest Payable $3,400 Unearned Commission revenue $5,100 $2,800 Unearned Commission revenue $2,300 Common stock $20,000 Common stock $20,000 Retained earnings $14,000 Retained earnings $14,000 Dividends $3,500 Dividends $3,500 Commission Revenue $6,700 $2,800 Commission Revenue $9,500 Supplies expense $0 $500 Supplies expense $500 Salary Expense $1,800 $4,000 Salary Expense $5,800 Rent Expense $0 $1,700 Rent Expense $1,700 Interest expense $0 $800 Interest expense $800 Advertising expense $900 Advertising expense $900 Depreciation expense-Equipment $0 $2,600 Depreciation expense-Equipment $2,600 TOTAL $52,400 $52,400 12400 12400 TOTAL $59,800 $59,800 INCOME STATEMENT Commission Revenue $9,500 Expenses: Supplies expense $500 Salary Expense $5,800 Rent Expense $1,700 Interest expense $800 Advertising expense $900 Depreciation expense-Equipment $2,600 Totalexpenses $12,300 Income ($2,800) STATEMENT OF CHANGES IN RETAINED EARNINGS Retained earning in the beginning $14,000 Dividends ($3,500) Income ($2,800) Retained earning at the end of month $7,700 BALANCE SHEET ASSETS: Cash $2,900 Accounts receivable $12,000 Prepaid Rent $1,400 Supplies $200 Equipment $27,500 Accumulated Depreciation-Equipment ($6,600) Total Assets $37,400 LIABILITIES: Salaries Payable $4,000 Interest Payable $3,400 Unearned Commission revenue $2,300 Total Liabilities $9,700 SHAREHOLDERS' EQUITY: Common stock $20,000 Retained earnings $7,700 Total Shareholders' equity $27,700 Total Liabilities and Shareholder Equity $37,400

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