Chapter 3, Problem 3.42BP

Journalizing and posting adjustments to the four-column accounts and preparing an adjusted trial balance

The unadjusted trial balance of Irvine Inn Company at December 31, 2016, and the data needed for the adjustments follow.

Adjustment data at December 31 follow:

a. As of December 31, Irvine Inn had $500 of Prepaid Insurance remaining.

b. At the end of the month, Irvine Inn had $400 of office supplies remaining.

c. Depreciation on the building is $4,100.

d. Irvine Inn pays its employees on Friday for the weekly salaries. Its employees earn $1,000 for a five-day workweek. December 31 falls on Wednesday this year.

e. On November 20, Irvine Inn contracted to perform services for a client receiving $ 1,600 in advance. Irvine In n recorded this receipt of cash as Unearned Revenue.

As of December 31, Irvine Inn has $1,100 still unearned.

Requirements

1. Journalize the adjusting entries on December 31.

2. Using the unadjusted trial balance, open the accounts (use a four-column ledger) with the unadjusted balances. Post the adjusting entries to the ledger accounts.

3. Prepare the adjusted trial balance.

4. Assuming the adjusted trial balance has total debits equal to total credits, does this mean that the adjusting entries have been recorded correctly? Explain.