Question

Preparing Adjusting Entries in a Worksheet

Following is the unadjusted trial balance of Skylar Gaming, Inc. at the end of its first year of operations, December 31, 20x7:
Account Name DR. CR.
Cash $71,550
Accounts Receivable $25,200
Supplies $550
Prepaid Insurance $12,000
Equipment $31,750
Accumulated Depreciation-Equipment $4,050
Accounts Payable $6,700
Salaries Payable $0
Unearned Revenue $2,200
Common Stock $45,700
Retained Earnings $23,850
Dividends $3,500
Revenue $80,750
Depreciation Expense-Equipment $2,000
Salaries Expense $4,750
Insurance Expense $3,100
Rent Expense $4,200
Supplies Expense $2,500
Utilities Expense $2,150
$163,250 $163,250
The following additional information is available:
Skylar Gaming, Inc. needs to accrue $2,000 in salaries that will not be paid until next month.
Skylar Gaming, Inc. has earned $2,000 of the services that were paid for in advance as included in the unearned revenue account.
At the end of the period, Skylar Gaming, Inc. has provided services in the amount of $500 to another customer (John Gartner). However, Skylar has not billed them yet since they only issue bills at the beginning of each month.
Skylar Gaming, Inc. needs to record the annual $1,025 of depreciation on the equipment.
One month of the 12-month insurance policy in prepaid insurance has been used up, and a journal entry is needed to reflect this.
At the end of the period, $125 in supplies are remaining.
Required:
Prepare all necessary adjusting entries at December 31, 20x7 Descriptions are not needed.
Using the below linked template prepare an adjusted trial balance at December 31, 20x7.
Using a worksheet template, prepare an income statement, statement of retained earnings, and a balance sheet.
Prepare closing entries including descriptions.

Answer 1

Salaries Expense (Dr.) $2,000

Salaries Payable (Cr.) $2,000

Unearned revenue (Dr.) $2,000

Revenue (Cr.) $2,000

Accounts Receivable (Dr.) $500

Revenue (Cr.) $500

Depreciation expense (Dr.) $1,025

Accumulated Depreciation (Cr.) $1,025

Insurance Expense (Dr.) $1,000

Prepaid insurance (Cr.) $1,000

Supplies Expense (Dr.) $425

Office supplies (Cr.) $425

Step-by-step explanation:

Adjusting entries are prepared for Skylar Gaming Inc., for the transactions that are already recorded. These transaction are adjusted for the change in effects at the month end. Skylar Gaming has prepared all necessary adjusting entries to reflect true accounting impact of every transaction.