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Final Example

The document outlines the financial records of Passehl Rental Agency as of December 31, including adjusting entries for depreciation, unearned rent revenue, interest payable, and supplies expense. It provides an adjusting trial balance, a balance sheet detailing assets, liabilities, and owner's equity, as well as a closing trial balance. The adjustments reflect the financial position and performance of the agency for the period.

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15 views2 pages

Final Example

The document outlines the financial records of Passehl Rental Agency as of December 31, including adjusting entries for depreciation, unearned rent revenue, interest payable, and supplies expense. It provides an adjusting trial balance, a balance sheet detailing assets, liabilities, and owner's equity, as well as a closing trial balance. The adjustments reflect the financial position and performance of the agency for the period.

Uploaded by

mobilelegendsgame529
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Final Example: The ledger of Passehl Rental Agency on December 31 of the current year includes the selected

accounts, shown below, before adjusting entries have been prepared.


Debit Credit
Prepaid Insurance $ 3,600
Supplies $ 2,800
Equipment $ 25,000
Accumulated Depreciation—Equipment $ 8,400
Notes Payable $ 10,000
Unearned Rent Revenue $ 10,200
Rent Revenue $ 16,800
Interest Expense $0
Salaries and Wages Expense 14,000

An analysis of the accounts shows the following.


1. The equipment depreciates $400 per month.
2. One-third of the unearned rent revenue was earned during the quarter.
3. Interest of $500 is accrued on the notes payable.
4. Supplies on hand total $750.
5. Insurance expires at the rate of $300 per month.
Instructions
Additional accounts are Depreciation Expense, Insurance Expense, Interest Payable, and Supplies Expense.
1. Prepare the adjusting entries at December 31
2. Prepare T-Account and Adjusting Trail Balance.
3. Prepare Financial Statement (Income Statement, Owner Equity statement, Balance Sheet).
4. Prepare Journal Closing.
5. Prepare Closing T-account and Closing Trail Balance.

Adjusting Trail Balance


Debit Credit
Prepaid Insurance $ 3,300
Supplies $ 750
Equipment $ 25,000
Accumulated Depreciation—Equipment $ 8,800
Notes Payable $ 10,000
Unearned Rent Revenue $ 6,800
Rent Revenue $ 20,200
Interest Expense $ 500
Salaries and Wages Expense 14,000
Depreciation Expense 400
Insurance Expense 300
Interest Payable 500
Supplies Expense 2,050
$ 46,300 $ 46,300

Balance Sheet

Assets
Prepaid Insurance $ 3,300
Supplies $ 750
Equipment $ 25,000
Accumulated Depreciation—Equipment $ 8,800 $ 16,200
Total Assets $ 20,250
Liabilities and Equity
Notes Payable $ 10,000
Unearned Rent Revenue $ 6,800
Interest Payable 500
Total Liabilities $ 17,300
Owner’s Equity
Owner’s Capital $ 2,950
Total Liabilities and Owner’s Equity $ 20,250
Closing Trail Balance
Debit Credit
Prepaid Insurance $ 3,300
Supplies $ 750
Equipment $25,000
Accumulated Depreciation—Equipment $ 8,800
Notes Payable $ 10,000
Unearned Rent Revenue $ 6,800
Interest Payable 500
Owner’s Capital $ 2,950
$ 29,050 $ 29,050

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