A six column table for JJW Company follows. The first two columns contain the unadjusted trial balance for the company as of July 31, 2011. The last two columns contain the adjusted trial balance as of the same date.
Required
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 it at the bottom of the table.
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, 2011 (note: J. Winner, Capital at July 31, 2010, was $28,420, and the current year withdrawals were $10,000), and (b) the balance sheet as of July 31, 2011.
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Unadjusted |
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Adjusted |
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Trial Balance |
Adjustments |
Trial Balance |
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Cash |
$27,000 |
$27,000 |
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Accounts receivable |
12,000 |
22,460 |
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Office supplies |
18,000 |
3,000 |
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Prepaid insurance |
7,320 |
4,880 |
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Office equipment |
92,000 |
92,000 |
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Accum depreciation — |
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Office equip |
$12,000 |
$18,000 |
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Accounts payable |
9,300 |
10,200 |
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Interest payable |
0 |
800 |
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Salaries payable |
0 |
6,600 |
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Unearned consulting fees |
16,000 |
14,300 |
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Long term notes payable |
44,000 |
44,000 |
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J Winner, Capital |
28,420 |
28,420 |
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J Winner, Withdrawals |
10,000 |
10,000 |
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Consulting fees earned |
156,000 |
168,160 |
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Depreciation expense — |
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Office equip |
0 |
6,000 |
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Salaries expense |
71,000 |
77,600 |
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Interest expense |
1,400 |
2,200 |
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Insurance expense |
0 |
2,440 |
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Rent expense |
13,200 |
13,200 |
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Office supplies expense |
0 |
15,000 |
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Advertising expense |
13,800 |
14,700 |
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Totals |
$265,720 |
$265,720 |
$290,480 |
$290,480 |
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