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Jackson Consulting Unadjusted Trial Balance – December 31, 2018                                &nbs

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.

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
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Answer #1

Correct answer---(e) a credit to prepaid rent for $16,000

Full journal entry will be

Rent expense                $16,000

          Prepaid Rent                 $16,000.

         

Rent expense of 8 months will be recorded and adjusted with prepaid rent. Balance in prepaid rent should be for 4 months, that is unexpired period of rent. Balance in prepaid rent after the adjusting entry will be $8000 (24000-16000)

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