Answered: 5. Prepare a corrected adjusted trial…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Consider the following unadjusted account balances for the year ended December 31, 2022, as prepared
by the bookkeeper of Something-Wrong Inc. The bookkeeper is new to the job and prepared the trial
balance listing in alphabetical account name order (assume accounts have normal balances).
Accounts payable ..................................................... $ 9,500
Accounts receivable ................................................. 14,260
Cash .......................................................................... 22,222
Share capital (Common shares) ............................... 30,000
Dividends.................................................................. 5,000
Equipment................................................................ 12,000
Prepaid insurance..................................................... 25,444
Land.......................................................................... 20,000
Notes payable (due next month) ............................. 25,300
Retained earnings..................................................... 12,815
Insurance expense.................................................... 12,689
Service revenue........................................................ 89,550
Supplies inventory.................................................... 2,750
Salaries expense....................................................... 53,500
Salaries payable........................................................ 700
Requirements:
1. Prepare the adjusting journal entry given that the remaining unpaid salaries due to employees at
the end of the period is $2,000.
2. Prepare the adjusting journal entry given that the Accrued Interest Payable with on the note
payable at the end of the period is $1,490.
3. Prepare the adjusting journal entry given that the insurance still unexpired/unused at the end of
the period is $12,000.
4. Equipment was recently purchased, so there is neither depreciation expense nor accumulated
depreciation recorded in the accounting records yet. The equipment is expected to have a 8 year
useful life, and a residual value of $1,400. Prepare the adjusting journal entry to record the
depreciation for the 2022 fiscal year.
5. Prepare a corrected adjusted trial balance as at December 31, 2022 from the above account
information, and also considering the adjustment data provided.
6. Prepare an income statement for the year ended December 31, 2022