Related questions with answers

Unearned Revenue is a(n) account and carries a normal balance.

a. asset; debit
b. revenue; debit
c. liability; credit
d. asset; credit

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

\begin{array}{c} \textbf{MIDWAY INN COMPANY}\\ \textbf{Unadjusted Trial Balance}\\ \textbf{December 31, 2018} \end{array}

\begin{array}{lrr} {\textbf{Account Title}}&\textbf{Debit\hspace{6pt}}&\textbf{Credit\hspace{4pt}}\\ \text{Cash}&\text{\$\hspace{7pt}14,500}\\ \text{Accounts Receivable}&\text{15,100}\\ \text{Prepaid Insurance}&\text{1,400}\\ \text{Office Supplies}&\text{700}\\ \text{Building}&\text{518,000}\\ \text{Accumulated Depreciation- Building}&&\text{\$\hspace{2pt}310,000}\\ \text{Accounts Payable}&&\text{4,210}\\ \text{Salaries Payable}\\ \text{Unearned Revenue}&&\text{1,600}\\ \text{Common Stock}&&\text{222,160}\\ \text{Dividends}&\text{1,890}\\ \text{Service Revenue}&&\text{16,900}\\ \text{Salaries Expense}&\text{2,600}\\ \text{Insurance Expense}\\ \text{Depreciation Expense- Building}\\ \text{Advertising Expense}&\text{680}\\ \text{Supplies Expense}&\text{\underline{\hspace{40pt}}}&\text{\underline{\hspace{40pt}}}\\ \text{Total}&\underline{\underline{\$\hspace{2pt}\text{554,870}}}&\underline{\underline{\$\hspace{2pt}\text{554,870}}}\\ \end{array}

Adjustment data at December 31 follow:

a. As of December 31, Midway Inn had $800 of Prepaid Insurance remaining.
b. At the end of the month, Midway Inn had$500 of office supplies remaining.
c. Depreciation on the building is $2,100.
d. Midway Inn pays its employees on Friday for the weekly salaries. Its employees earn$1,300 for a five-day workweek. December 31 falls on Wednesday this year.
e. On November 20, Midway Inn contracted to perform services for a client receiving $1,600 in advance. Midway Inn recorded this receipt of cash as Unearned Revenue. As of December 31, Midway Inn has$1,400 still unearned.

Requirements

Journalize the adjusting entries on December 31.
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.
Prepare the adjusted trial balance.
Assuming the adjusted trial balance has total debits equal to total credits, does this mean that the adjusting entries have been recorded correctly? Explain.

The unadjusted trial balance of Avery Air Purification System at December 31, 2018, and the data needed for the adjustments follow.

\begin{array}{c} \textbf{AVERY AIR PURIFICATION SYSTEM}\\ \textbf{Unadjusted Trial Balance}\\ \textbf{December 31, 2018} \end{array}

\begin{array}{lrr} {\textbf{Account Title}}&\textbf{Debit\hspace{6pt}}&\textbf{Credit\hspace{4pt}}\\ \text{Cash}&\text{\$\hspace{10pt}7,100}\\ \text{Accounts Receivable}&\text{19,100}\\ \text{Prepaid Rent}&\text{2,400}\\ \text{Office Supplies}&\text{1,400}\\ \text{Equipment}&\text{20,000}\\ \text{Accumulated Depreciation- Equipment}&&\text{\$\hspace{10pt}3,800}\\ \text{Accounts Payable}&&\text{3,500}\\ \text{Salaries Payable}\\ \text{Unearned Revenue}&&\text{2,700}\\ \text{Common Stock}&&\text{39,300}\\ \text{Dividends}&\text{9,400}\\ \text{Service Revenue}&&\text{15,900}\\ \text{Salaries Expense}&\text{3,900}\\ \text{Rent Expense}\\ \text{Depreciation Expense- Equipment}\\ \text{Advertising Expense}&\text{1,900}\\ \text{Supplies Expense}&\text{\underline{\hspace{38pt}}}&\text{\underline{\hspace{38pt}}}\\ \text{Total}&\underline{\underline{\$\hspace{5pt}\text{65,200}}}&\underline{\underline{\$\hspace{5pt}\text{65,200}}}\\ \end{array}

Adjustment data at December 31 follow:

a. On December 15, Avery contracted to perform services for a client receiving $2,700 in advance. Avery recorded this receipt of cash as Unearned Revenue. As of December 31, Avery has completed$2,100 of the services.
b. Avery prepaid two months of rent on December 1. (Assume the Prepaid Rent balance, as shown on the unadjusted trial balance, represents the two months of rent prepaid on December 1.)
c. Avery used $750 of office supplies during the month.
d. Depreciation for the equipment is$800.
e. Avery received a bill for December's online advertising, $500. Avery will not pay the bill until January. (Use Accounts Payable.)
f. Avery pays its employees weekly on Monday for the previous week's wages. Its employees earn$2,000 for a five-day workweek. December 31 falls on Wednesday this year.
g. On October 1, Avery agreed to provide a four-month air system check (beginning October 1) for a customer for $2,800. Avery has completed the system check every month, but payment has not yet been received and no entries have been made.

Requirements

Journalize the adjusting entries on December 31.
Using the unadjusted trial balance, open the T-accounts with the unadjusted balances. Post the adjusting entries to the T-accounts.
Prepare the adjusted trial balance.
How will Avery Air Purification System use the adjusted trial balance?