Chapter 5, Problem 2PA

1.

To determine

Record the adjusted trial balance in adjusted trial balance column of the worksheet.

Explanation of Solution

Trial Balance: Trial balance is the summary of all the accounts affected in a financial year. Financial statements are prepared with the help of trial balance.

The adjusted trial balance section of the worksheet of UBS is as follows:

Account Title	Unadjusted Trial balance		Adjustments		Adjusted Trial balance
	Dr. ($)	Cr. ($)	Dr. ($)	Cr. ($)	Dr. ($)	Cr. ($)
Cash					23,075
Accounts receivable					3,812
Supplies					4,600
Prepaid rent					21,000
Equipment					27,500
Accumulated depreciation-equipment						950
Accounts payable						9,000
RD, capital						41,837
RD, drawing					4,000
Fees income						48,550
Depreciation expense–equipment					950
Rent expense					3500
Salaries expense					8500
Supplies expense					2,900
Utilities expense					500
Total					$100,337	$100,337

Table (1)

2.

To determine

Prepare the adjusting entries in the adjustment column.

Explanation of Solution

The adjustments section of the worksheet of UBS is as follows:

Account Title	Unadjusted Trial balance		Adjustments		Adjusted Trial balance
	Dr. ($)	Cr. ($)	Dr. ($)	Cr. ($)	Dr. ($)	Cr. ($)
Cash					23,075
Accounts receivable					3,812
Supplies				2,900	4,600
Prepaid rent				3,500	21,000
Equipment					27,500
Accumulated depreciation-equipment				950		950
Accounts payable						9,000
RD, capital						41,837
RD, drawing					4,000
Fees income						48,550
Depreciation expense–equipment			950		950
Rent expense			3,500		3500
Salaries expense					8500
Supplies expense			2,900		2,900
Utilities expense					500
Total			7,350	7,350	100,337	100,337

Table (2)

3.

To determine

Complete the trial balance columns of the worksheet and find out the balance of prepaid rent prior to the adjustment made.

Explanation of Solution

The complete trial balance columns of the worksheet of UBS are as follows:

Account Title	Unadjusted Trial balance		Adjustments		Adjusted Trial balance
	Dr. ($)	Cr. ($)	Dr. ($)	Cr. ($)	Dr. ($)	Cr. ($)
Cash	23,075				23,075
Accounts receivable	3,812				3,812
Supplies	7,500			2,900	4,600
Prepaid rent	24,500			3,500	21,000
Equipment	27,500				27,500
Accumulated depreciation-equipment				950		950
Accounts payable		9,000				9,000
RD, capital		41,837				41,837
RD, drawing	4,000				4,000
Fees income		48,550				48,550
Depreciation expense–equipment			950		950
Rent expense			3,500		3500
Salaries expense	8,500				8500
Supplies expense			2,900		2,900
Utilities expense	500				500
Total	99,387	99,387	7,350	7,350	100,337	100,337

Table (3)

The balance of prepaid rent prior to the adjusting entry of expired rent was $24,500.

Working Note:

Calculate balance of prepaid rent prior to the adjusting entry of expired rent:

$\begin{array}{c}\mathrm{Unadjusted}prepaidinsurancebalance=\mathrm{Adjusted}balance+\mathrm{Expired}rent\\ =\$21,000+\$3,500\\ =\$24,500\end{array}$