Terrific Temps fills temporary employment positions for local businesses. Some businesses pay in advance for services; others are billed after services have been performed. Advance payments are credited to an account entitled Unearned Fees. Adjusting entries are performed on a monthly basis. Below is an unadjusted trial balance dated December 31 of the current year. (Bear in mind that adjusting entries have already been made for the first 11 months, but not for December.) TERRIFIC TEMPS UNADJUSTED TRIAL BALANCE DECEMBER 31, CURRENT YEAR Cash $27,020 Accounts receivable 59,200 Unexpired insurance 900 Prepaid rent 3,000 Office supplies 600 Equipment 60,000 Accumulated depreciation: equipment $29,500 Accounts payable 4,180 Notes payable 12,000 Interest payable 320 Unearned fees 6,000 Income taxes payable 4,000 Unearned revenue 20,000 Retained earnings 49,000 Capital stock 25,000 Dividends 3,000 Fees earned 75,000 Travel expense 5,000 Insurance expense 2,980 Rent expense 9,900 Office supplies expense 780 Utilities expense 4,800 Depreciation expense: equipment 5,500 Salaries expense 30,000 Interest expense 320 Income taxes expense 12,000 $225,000 $225,000 Other Data 1. Accrued but unrecorded fees earned as of December 31 amount to $1,500. 2. Records show that $2,500 of cash receipts originally recorded as unearned fees had been earned as of December 31. 3. The company purchased a six-month insurance policy on September 1 of the current year for $1,800. 4. On December 1 of the current year the company paid its rent through February 28 of the upcoming year. 5. Office supplies on hand at December 31 amount to $400. 6. All equipment was purchased when the business first formed. The estimated life of the equipment at that time was 10 years (or 120 months). 7. On August 1 of the current year the company borrowed $12,000 by signing a 6- month, 8 percent note payable. The entire note, plus 6 months’ accrued interest, is due on February 1 of the upcoming year. 8. Accrued but unrecorded salaries at December 31 amount to $2,700. 9. Estimated income taxes expense for the entire year totals $15,000. Taxes are due in the first quarter of the upcoming. Instructions - Take note that I have modified the instructions compared to the textbook. 1. For each of the numbered paragraphs, prepare the necessary adjusting entry (omit explanation). 2. Using T accounts, determine the new balances of the accounts affected by the adjusting journal entries. 3. Prepare the adjusted trial balance in good form (TIP: using the new account balances).
Terrific Temps fills temporary employment positions for local businesses. Some businesses
pay in advance for services; others are billed after services have been performed. Advance
payments are credited to an account entitled Unearned Fees.
on a monthly basis. Below is an unadjusted
year. (Bear in mind that adjusting entries have already been made for the first 11 months, but
not for December.)
TERRIFIC TEMPS
UNADJUSTED TRIAL BALANCE
DECEMBER 31, CURRENT YEAR
Cash $27,020
Accounts receivable 59,200
Unexpired insurance 900
Prepaid rent 3,000
Office supplies 600
Equipment 60,000
Accumulated
Accounts payable 4,180
Notes payable 12,000
Interest payable 320
Unearned fees 6,000
Income taxes payable 4,000
Unearned revenue 20,000
Retained earnings 49,000
Capital stock 25,000
Dividends 3,000
Fees earned 75,000
Travel expense 5,000
Insurance expense 2,980
Rent expense 9,900
Office supplies expense 780
Utilities expense 4,800
Depreciation expense: equipment 5,500
Salaries expense 30,000
Interest expense 320
Income taxes expense 12,000
$225,000 $225,000
Other Data
1. Accrued but unrecorded fees earned as of December 31 amount to $1,500.
2. Records show that $2,500 of cash receipts originally recorded as unearned fees had
been earned as of December 31.
3. The company purchased a six-month insurance policy on September 1 of the current
year for $1,800.
4. On December 1 of the current year the company paid its rent through February 28 of
the upcoming year.
5. Office supplies on hand at December 31 amount to $400.
6. All equipment was purchased when the business first formed. The estimated life of
the equipment at that time was 10 years (or 120 months).
7. On August 1 of the current year the company borrowed $12,000 by signing a 6-
month, 8 percent note payable. The entire note, plus 6 months’ accrued interest, is due
on February 1 of the upcoming year.
8. Accrued but unrecorded salaries at December 31 amount to $2,700.
9. Estimated income taxes expense for the entire year totals $15,000. Taxes are due in
the first quarter of the upcoming.
Instructions - Take note that I have modified the instructions compared to the textbook.
1. For each of the numbered paragraphs, prepare the necessary adjusting entry (omit
explanation).
2. Using T accounts, determine the new balances of the accounts affected by the
adjusting journal entries.
3. Prepare the adjusted trial balance in good form (TIP: using the new account balances).
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