Jackson Consulting Unadjusted Trial Balance – December 31, 2018 Debits Credits C
ID: 2339513 • Letter: J
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.
The adjusting journal entry to record (f) above would include:
a debit to rent expense for $10,000
a debit to prepaid rent for $16,000
a credit to rent expense for $10,000
a credit to cash for $16,000
a credit to prepaid rent for $16,000
A.a debit to rent expense for $10,000
B.a debit to prepaid rent for $16,000
C.a credit to rent expense for $10,000
D.a credit to cash for $16,000
E.a credit to prepaid rent for $16,000
Explanation / Answer
The Adjusting journal entry to record (f or 6) above would include:
Answer: As the rent we have been paid for a year from may 2018 the rent will be a prepaid rent of 24,000 for a year upto may 2019.
But as of december 2018 we are closing our books we will pass an adjustment entry to expense the amount for the months which we have used in the existing period i.e from may 2018 to december 2018.
As rent for 12 months is 24,000, monthly rent will be 2,000 and as we have used 8 months in the current financial year we will have to expense that amount of 16,000 ( 8 Mon X 2,000 ) and the remaining balance will be lying in prepaid rent for the next year.
So, Adjusting entry will be E. a credit to prepaid rent for 16,000 and a subsequent debit to rent expense.
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