Chapter 3, Problem 3.14E

Prepare an adjusted trial balance (LO3–3, 3–4)

The December 31, 2018, unadjusted trial balance for Demon Deacons Corporation is presented below.

Accounts	Debit	Credit
Cash	$10,000
Accounts Receivable	15,000
Prepaid Rent	7,200
Supplies	4,000
Deferred Revenue		$ 3,000
Common Stock		11,000
Retained Earnings		6,000
Service Revenue		51,200
Salaries Expense	35,000
	$71,200	$71,200

At year-end, the following additional information is available:

  a.    The balance of Prepaid Rent, $7,200, represents payment on October 31, 2018, for rent from November 1, 2018, to April 30, 2019.

  b.    The balance of Deferred Revenue, $3,000, represents payment in advance from a customer. By the end of the year, $750 of the services have been provided.

  c.    An additional $700 in salaries is owed to employees at the end of the year but will not be paid until January 4, 2019.

  d.    The balance of Supplies, $4,000, represents the amount of office supplies on hand at the beginning of the war of $1,700 plus an additional $2,300 purchased throughout 2018. By the end of 2018, only $800 of supplies remains.

Required:

  1.    Update account balances for the year-end information by recording any necessary adjusting entries. No prior adjustments have been made in 2018.

  2.    Prepare an adjusted trial balance as of December 31, 2018.