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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
Business   Accounting   
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Homework Answers

Answer #1

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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