This problem tests the ability to make proper adjusting entries which may effect a prior year or the current year.
A partial trial balance is provided and then there are additional adjusting information given. The instructions are to determine what adjusting entries need to be made.
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First, you adjust the balance sheet accounts to the amounts they should be based on info provided. The trick is to decide where the other side of the entry goes: either to current year income and expense (2008) or to a prior accounting period.
(a) 1. Supplies is $2700 and should be $1100. You credit supplies for $1600 and post the debit to supplies expense.
(a) 2. The narrative states that the entry to be made will all be 2008 expense. They don't say that the prior year was wrong and therefore the change happened during 2008. Accrued wages was $1500 at the beginning of the year, and you will have to make a credit entry of $2900 to ...
Given a partial trial balance and 7 items of additional information, adjust the trial balance for the information contained in the problem. Determine what the entries would be if the books have been 'closed'.
Error Analysis and Correcting Entries
(Error Analysis; Correcting Entries) A partial trial balance of Julie Hartsack Corporation is as follows on December 31, 2008.
Supplies on hand $2,700
Accrued salaries and wages $1,500
Interest receivable on investments 5,100
Prepaid insurance 90,000
Unearned rent 0
Accrued interest payable 15,000
Additional adjusting data:
1 . A physical count of supplies on hand on December 31, 2008, totaled $1,100.
2 . Through oversight, the Accrued Salaries and Wages account was not changed during 2008. Accrued salaries and wages on December 31, 2008, amounted to $4,400.
3 . The Interest Receivable on Investments account was also left unchanged during 2008. Accrued interest on investments amounts to $4,350 on December 31, 2008.
4 . The unexpired portions of the insurance policies totaled $65,000 as of December 31, 2008.
5 . $28,000 was received on January 1, 2008 for the rent of a building for both 2008 and 2009. The entire amount was credited to rental income.
6 . Depreciation for the year was erroneously recorded as $5,000 rather than the correct figure of $50,000.
7 . A further review of depreciation calculations of prior years revealed that depreciation of $7,200 was not recorded. It was decided that this oversight should be corrected by a prior period adjustment.
(a) Assuming that the books have not been closed, what are the adjusting entries necessary at December 31, 2008? (Ignore income tax considerations.)
(b) Assuming that the books have been closed, what are the adjusting entries necessary at December 31, 2008? (Ignore income tax considerations.)View Full Posting Details