Jackson Consulting Unadjusted Trial Balance – December 31, 2018 Debits Credits C

Question

Jackson Consulting

Unadjusted Trial Balance – December 31, 2018

                                                                                                          Debits                                          Credits

Cash                                                                                               $ 11,500    

Accounts Receivable                                                                        3,500

Supplies                                                                                           1,200

Prepaid Rent                                                                                  24,000

Equipment                                                                                   14,000

Accumulated Depreciation                                                                                                                $1,400

Accounts Payable                                                                                                                             1,900    

Unearned Service Revenue                                                                                                             2,800

Common Stock                                                                                                                             10,300

Retained Earnings                                                                                                                            7,500

Dividends                                                                                       4,500

Service Revenue                                                                                                                              91,350

Salaries Expense                                                                        55,000

Advertising Expense                                                                         900      

Utilities Expense                                                                               650                                                                    

Total: Debits =$115,250 Credits total = $115,250

Additional Information:

1.) The equipment was purchased on January 1, 2017. The useful life is estimated to be 10 years.

2.) As of December 31, 2018, the company had accrued salaries of $950.

3.) Of the balance in the unearned revenue account, $500 had not been earned by year -end.

4.) On December 1, 2018, the company paid $900 for four months of advertising.

5.) A count of supplies on December 31, 2018 showed $400 of supplies had been used during the year.

6.) On May 1, 2018, the company rented an office building for one year and paid $24,000 in cash.

1. The adjusting entry to record (d) above is:

Advertising Expense 225

. Prepaid Advertising 225

Advertising Expense     900

.      Cash 900

Prepaid Advertising   900

.      Cash   900

Prepaid Advertising   675

.    Advertising Expense    675

Prepaid Advertising   225

.   Advertising Expense   225

Advertising Expense 225

. Prepaid Advertising 225

Advertising Expense     900

.      Cash 900

Prepaid Advertising   900

.      Cash   900

Prepaid Advertising   675

.    Advertising Expense    675

Prepaid Advertising   225

.   Advertising Expense   225

Explanation / Answer

Correct journal entry (d)

Prepaid Advertising                 $675

                   Advertising Expense      $675

Explanation

Advertising is paid for 4 months and out of 4 months only 1 month has passed which is December. This means advertising expense can only be recoded for 1 month. Since advertising expense already has a balance of $900. A credit entry for $675 is done to make its final balance equal to expense of 1 month. The rest amount of $675 will be reported as prepaid advertising.

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