Chapter 3, Problem P3.36APGA

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

Learning Objectives 3,4

3. Adjusted trial balance $572, 040 total

The unadjusted trial balance of Guthrie Inn Company at December 31, 2018, and the data needed for the adjustments follow.

GUTHRIE INN COMPANY Unadjusted Trial Balance December 31, 2018
	Balance
Account Title	Debit	Credit
Cash	$13,500
Accounts Receivable	15,100
Prepaid Insurance	4,600
Office Supplies	800
Building	530,000
Accumulated Depreciation—Building		$260,000
Accounts Payable		1,710
Salaries Payable		0
Unearned Revenue		3,600
Guthrie, Capital		288,950
Guthrie, Withdrawals	2,340
Service Revenue		15,500
Salaries Expense	2,800
Insurance Expense	0
Depreciation Expense—Building	0
Advertising Expense	620
Supplies Expense	0
Total	$569,760	$569,760

Adjustment data at December 31 follow:

1. As of December 31, Guthrie had $700 of Prepaid Insurance remaining.
2. At the end of the month, Guthrie had $500 of office supplies remaining.
3. Depreciation on the building is $1,200.
4. Guthrie pays its employees weekly on Friday. Its employees earn $1,800 for a five-day workweek. December 31 falls on Wednesday this year.
5. On November 20, Guthrie contracted to perform services for a client receiving $3,600 in advance. Guthrie recorded this receipt of cash as Unearned Revenue. As of December 31, Guthrie has $1,600 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.