Question

Assume it is now December 31, 2017 and Nicole has just completed her first year of operations at Nicole’s Getaway Spa. After looking through her trial balance, she noticed that there are some items that have either not been recorded or are no longer up-to-date. Nicole’s Getaway Spa is renting its space at a cost of $600 per month. On September 1, 2017, Nicole paid eight months’ rent in advance using cash. This prepayment was recorded in the account Prepaid Rent back in September. The building, purchased at the beginning of the year for $47,000 cash, has estimated depreciation of $2,000 for 2017, but none has been recorded yet. The Equipment purchased in Chapter 3 (i.e. May 30th) for $18,500, has estimated depreciation of $5,000 for 2017, but none has been recorded yet. Salaries and wages to the support staff at Nicole’s Getaway Spa have been paid up to December 26, 2017. The support staff worked both December 27th and 28th and will be paid on January 5, 2018. Salaries and wages amount to $1,000 per day. The spa was closed December 29-31st. The insurance policy, purchased on June 1st for $3,000 cash, provides coverage for 12 months. The insurance coverage since June has been used up. The unadjusted amount in the Spa Supplies account was $2,000 at December 31, 2017 for supplies purchased on account. A year-end count showed $700 of supplies remain on hand. The Note Payable from Chapter 3 (i.e. May 30th) is due June 1, 2018 has estimated Interest Expense thru December 31, 2017 of $1,000, but none has been recorded yet. On the last day of December, a customer obtained spa services by using a $90 gift certificate that was purchased earlier in the month. Use of the gift certificate to pay for these services had not yet been recorded. Board of Directors declared a cash dividend in the amount of $1,000 on December 31, 2017 to be paid on January 15, 2018. This dividend has not been recorded. Required: Prepare an Adjusted Trial Balance

Answer 1

ADJUSTED TRIAL BALANCE

PARTICULARS	DEBIT ($)	CREDIT ($)
rent expense	5040
cash		8040
depreciation expense	5000
accumulated depreciation		5000
wages expense	2000
wage payable		2000
prepaid insurance	1250
insurance expenses	1750
Supplies	700
Supplies expenses	1300
Interest expenses	1000
Interest payable		1000
Retained income	1000
dividend payable		1000
Deferred Revenue from Gift Cards	90
Sales		90