Adjusting Entries from Trial Balances The accountant for Eva\'s Laundry prepared

Question

Adjusting Entries from Trial Balances

The accountant for Eva's Laundry prepared the following unadjusted and adjusted trial balances. Assume that all balances in the unadjusted trial balance and the amounts of the adjustments are correct.

*3,600 of insurance expired during the year.

Identify the errors in the accountant's adjusting entries by preparing a corrected adjusted trial balance. Assume that none of the accounts were affected by more than one adjusting entry. If an amount box does not require an entry, leave it blank.

Eva's Laundry Trial Balance May 31, 2016 Unadjusted Adjusted Debit
Balances Credit
Balances Debit
Balances Credit
Balances Cash 7,500 7,500 Accounts Receivable 18,250 23,250 Laundry Supplies 3,750 6,750 Prepaid Insurance* 5,200 1,600 Laundry Equipment 190,000 177,000 Accumulated Depreciation—Laundry Equipment 48,000 48,000 Accounts Payable 9,600 9,600 Wages Payable 1,000 Common Stock 35,000 35,000 Retained Earnings 75,300 75,300 Dividends 28,775 28,775 Laundry Revenue 182,100 182,100 Wages Expense 49,200 49,200 Rent Expense 25,575 25,575 Utilities Expense 18,500 18,500 Depreciation Expense 13,000 Laundry Supplies Expense 3,000 Insurance Expense 600 Miscellaneous Expense 3,250 3,250 350,000 350,000 358,000 351,000

Explanation / Answer

Solution:

Eva's Lanudry Adjusted Trial Balance 31-May-16 Particulars Debit Balances Credit Balances Cash $7,500.00 Accounts Receivable $23,250.00 Laundry Supplies ($3,750 - $3,000) $750.00 Prepaid Insurance $1,600.00 Laundry Equipment $190,000.00 Accumulated Depreciation-Laundry Equipment ($48,000 + $13,000) $61,000.00 Accounts Payable $9,600.00 Wages Payable $1,000.00 Common Stock $35,000.00 Retained Earnings $75,300.00 Dividends $28,775.00 Laundry Revenue ($182,100 + $5,000) $187,100.00 Wages Expense ($49,200 + $1,000) $50,200.00 Rent Expense $25,575.00 Utilities Expense $18,500.00 Depreciation Expense $13,000.00 Laundry Supplies Expense $3,000.00 Insurance Expense $3,600.00 Miscellaneous Expense $3,250.00 Totals $369,000.00 $369,000.00

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