Question

A partial adjusted trial balance of West Company at January 31, 2018, shows the
following.

WEST COMPANY
Adjusted Trial Balance
January 31, 2018

Debit Credit

Supplies $ 2,800
Prepaid Insurance 9,600
Salaries and Wages Payable $3,200
Unearned Revenue 3,000
Supplies Expense 3,800
Insurance Expense 1,600
Salaries and Wages Expense 7,200
Service Revenue 8,000

Instructions:
Answer the following questions, assuming the year begins January 1.
(a) If the amount in Supplies Expense is the January 31 adjusting entry, and $3,400 of supplies
was purchased in January, what was the balance in Supplies on January 1?
(b) If the amount in Insurance Expense is the January 31 adjusting entry, and the original
insurance premium was for one year, what was the total premium and when was the policy
purchased?
(c) If $10,000 of salaries was paid in January, what was the balance in Salaries and Wages
Payable at December 31, 2017?
(d) If $6,400 was received in January for services performed in January, what was the balance in
Unearned Revenue at December 31, 2017?

Answer 1

Answer:

Requirement a

Supplies Expense = Supplies Balance Jan 1 +Purchase - Supplies Balance Jan 31

3800 = X + 3400 - 2800

X = 3200 = Supplies Balance Jan 1

Requirement b

Total Prepaid Insurance = 1600 x 12 = 19200

Amount used = 1600 x 6 = 9600

Present Balance = 9600

Poilcy was purchased on August 1 ,2017

Requirement c

Current Salaries and Wages Expense = 7200

Salaries and Wages Payable Current Year = 3200

Current Salaries and Wages Expense paid = 7200 - 3200 = 4000

Salaries and Wages Payable previous years = 10000 - 4000 = 6000

Requirement d

Services performed = 8000

Services performed for cash = 6400

Unearned service revenue earned in January = 8000 - 6400 = 1600

Balance in Unearned Revenue at December 31, 2017 = 3000 + 1600 = 4600