Brave Advisors Service’s trial balance on December 31, 2014, is as follows.

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The following information is also available:
a. Ending inventory of office supplies, $264
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b. Prepaid rent expired, $440

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c. Depreciation of office equipment for the period, $660

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d. Accrued interest expense at the end of the period, $550

e. Accrued salaries at the end of the period, $330
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f. Service revenue still unearned at the end of the period, $1,166

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g. Service revenue earned but unrecorded, $2,200

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REQUIRED
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1. Open T accounts for the accounts in the trial balance plus the following: Interest
Payable; Salaries Payable; Office Supplies Expense; Depreciation Expense—Office
Equipment; and Interest Expense. Enter the balances shown on the trial balance.
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2. Determine the adjusting entries and post them directly to the T accounts.
3. Prepare an adjusted trial balance.
4. Which financial statements do each of the above adjustments affect? Which financial
statement is not affected by the adjustments?

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 SOLUTION:

1. and 2.

Cash Accounts Receivable Office Supplies

Bal. 16,500 Bal. 8,250 Bal. 2,662 (a) 2,398
(g) 2,200 Bal. 264
Bal. 10,450
Accumulated Depreciation—
Office
Prepaid Rent Office Equipment Equipment

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Bal. 1,320 (b) 440 Bal. 9,240 Bal. 1,540

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Bal. 880 (c) 660

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Bal. 2,200

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Accounts Payable
rs e Notes Payable Interest Payable
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Bal. 5,940 Bal. 11,000 (d) 550
Salaries Payable Unearned Service Revenue B. Cooper, Capital
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(e) 330 (f) 1,804 Bal. 2,970 Bal. 24,002

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Bal. 1,166
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B. Cooper, Withdrawals Service Revenue Salaries Expense

Bal. 22,000 Bal. 72,600 Bal. 49,400
(f) 1,804 (e) 330
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(g) 2,200 Bal. 49,730

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Bal. 76,604
Rent Expense Utilities Expense Office Supplies Expense
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Bal. 4,400 Bal. 4,280 (a) 2,398

(b) 440
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Bal. 4,840
Depreciation Expense—
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Office Equipment Interest Expense

(c) 660 (d) 550

3. Brave Advisors Service

Adjusted Trial Balance

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 December 31, 2014
Cash 16,500
Accounts Receivable 10,450
Office Supplies 264
Prepaid Rent 880
Office Equipment 9,240
Accumulated Depreciation—Office Equipment 2,200
Accounts Payable 5,940
Notes Payable 11,000
Interest Payable 550
Salaries Payable 330
Unearned Service Revenue 1,166
B. Cooper, Capital 24,002
B. Cooper, Withdrawals 22,000
Service Revenue 76,604

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Salaries Expense 49,730

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Rent Expense 4,840

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Utilities Expense 4,280

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Office Supplies Expense 2,398
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Depreciation Expense—Office Equipment 660
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Interest Expense 550
121,792 121,792
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4. a. Balance sheet, income statement, statement of owner's equity

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b. Balance sheet, income statement, statement of owner's equity

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c. Balance sheet, income statement, statement of owner's equity

d. Balance sheet, income statement, statement of owner's equity

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e. Balance sheet, income statement, statement of owner's equity

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f. Balance sheet, income statement, statement of owner's equity

g. Balance sheet, income statement, statement of owner's equity

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 The statement of cash flows is not affected by the adjustments.

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