Chapter 3, Problem 4BPSB

Prolme 3-4B Interpreting unadjusted and adjusted trial balances, and preparing financial statements P1 P2 P3 P4 P5 P6

A six-column table for JKL Company follows. The first two columns contain the unadjusted trial balance for the company as of July 31. The last two columns contain the adjusted trial balance as of the same date.

Unadjusted  Trial Balance  	Adjustments 	Unadjusted  Trial Balance 
Cash $45.000 	$ 45,000 
Accounts receivable 60,000	 66.660 
Office supplies 40.000 	17.000 
Prepaid insurance 8,200 	3.600 
Office equipment 120,000 	120,000 
Accumulated depreciation— 
Office equip $ 20.000	 $ 30.000 
Accounts payable 26.000 	 32,000 
Interest payable 0	2,150 
Salaries payable 0	 16,000 
Unearned consulting fees 40.000 	 27,800 
Long-term notes payable 75.000 	75,000 
Z.Yan, Capital 80.200 	 80,200 
Z. Van. Withdrawals 20,000	 20.000 
Consulting fees earned 234.600	 253,460 
Depredation expense— Office equip	 0	 10,000 
Salaries expense 	112.000	 128.000 
Interest expense	 8.600 	10.750 
Insurance expense	 0	 4,600 
Rent expense 	20.000 	20,000 
Office supplies expense 	0 23.000 
Advertising expense 	42,000	 48.000 
Totals	 $475,800 	$475,800	 $516,610	 $516,610 
Page 122

Required

Analysis Component

1. Analyze the differences between the unadjusted and adjusted trial balances to determine the eight adjustments that likely were made. Show the results of your analysis by inserting these adjustment amounts in the table's two middle columns. Label each adjustment with a letter a through h and provide a short description of each.

Preparation Component

2. Use the information in the adjusted trial balance to prepare the company's (a) income statement and its statement of owner's equity for the year ended July 31 [Note: J. Logan, Capital at July 31 of the peior year was $40,000, and the current-year withdrawals were $20,000] and (b) the balance sheet as of July 31.