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  • Sep 23, 2006, 12:09 PM
    cahitmanhart
    Trial balance
    I have this question about a trial balance, every time I try to balance it I come with debits 42,110 and credits 42,390. I really do not enjoy trial balances and my teacher has not explained one in class yet, but it is in my homework. The subtractions and additions are my attempts to balance them not the book

    Josh Stein started his own consulting firm, Astromech Consulting, on June 1, 2007. The trial balance at June 30 is as follows.

    ASTROMECH CONSULTING
    Trial Balance
    June 30, 2007
    Debit Credit
    Cash $ 6,850-180
    Accounts Receivable 7,000+3000
    Prepaid Insurance 2,640-220
    Supplies 2,000-980
    Office Equipment 15,000-250
    Accounts Payable $ 4,540
    Unearned Service Revenue 5,200+2900
    Common Stock 21,750
    Service Revenue 8,000
    Salaries Expense 4,000
    Rent Expense 2,000
    $39,490 $39,490

    In addition to those accounts listed on the trial balance, the chart of accounts for Astromech also contains the following accounts: Accumulated Depreciation—Office Equipment, Utilities Payable, Salaries Payable, Depreciation Expense, Insurance Expense, Utilities Expense, and Supplies Expense.

    Other data:



    1.
    Supplies on hand at June 30 total $980.

    2.
    A utility bill for $180 has not been recorded and will not be paid until next month.

    3.
    The insurance policy is for a year. So I guess it is 2640/12=220 a month

    4.
    $2,900 of unearned service revenue has been earned at the end of the month.

    5.
    Salaries of $1,250 are accrued at June 30.

    6.
    The office equipment has a 5-year life with no salvage value and is being depreciated at $250 per month for 60 months.

    7.
    Invoices representing $3,000 of services performed during the month have not been recorded as of June 30.
  • Sep 23, 2006, 02:02 PM
    CaptainForest
    Quote:

    Originally Posted by cahitmanhart
    Josh Stein started his own consulting firm, Astromech Consulting, on June 1, 2007. The trial balance at June 30 is as follows.

    In addition to those accounts listed on the trial balance, the chart of accounts for Astromech also contains the following accounts: Accumulated Depreciation—Office Equipment, Utilities Payable, Salaries Payable, Depreciation Expense, Insurance Expense, Utilities Expense, and Supplies Expense.

    It is important to note the names of the other accounts above that you also have the ability to use.

    To make the Trial Balance easier to read on AskMeHelpDesk, I will simply divide them into 2 categories, Debits and Credits.

    ASTROMECH CONSULTING
    Trial Balance
    June 30, 2007

    Debits
    Cash 6,850
    Accounts Receivable 7,000
    Prepaid Insurance 2,640
    Supplies 2,000
    Office Equipment 15,000
    Salaries Expense 4,000
    Rent Expense 2,000

    Credits
    Accounts Payable 4,540
    Unearned Service Revenue 5,200
    Common Stock 21,750
    Service Revenue 8,000

    Since you said you have not been taught how to do a trial balance, I will try to show you.

    First, what you would like to do is with each adjuting entry belwow (number 1 -7), write out the Journal Entry that you need to do and therefore, it will become a simple matter of making the changes up top to the trial balance.

    As you can see, I have changed the form, but that is simply because the spacing functions of a trail balance does not translate online to AskMeHelpDesk.


    Quote:

    Originally Posted by cahitmanhart
    1. Supplies on hand at June 30 total $980.

    Our unadjusted trial balance shows we have $2,000 worth of supplies. However, we are only suppose to have $980. Therefore, we have USED (2,000-980) $1,020 worth of Supplies.

    Dr. Supplies Expense 1,020
    Cr. Supplies 1,020


    Quote:

    Originally Posted by cahitmanhart
    2. A utility bill for $180 has not been recorded and will not be paid until next month.

    Just because we haven't paid the bill, doesn't mean we don't record it.

    Dr. Utilities Expense 180
    Cr. Utilities Payable 180

    A payable is set up because we owe the money, just haven't' paid it yet.


    Quote:

    Originally Posted by cahitmanhart
    3. The insurance policy is for a year. so i guess it is 2640/12=220 a month

    Your calculation is correct. So since it has only been 1 month…

    Dr. Insurance Expense 220
    Cr. Prepaid Insurance 220


    Quote:

    Originally Posted by cahitmanhart
    4. $2,900 of unearned service revenue has been earned at the end of the month.

    Dr. Unearned Service Revenue 2,900
    Cr. Service Revenue 2,900

    A simple transfer of money from 1 account to another.


    Quote:

    Originally Posted by cahitmanhart
    5. Salaries of $1,250 are accrued at June 30.

    Just because we have not paid out the salaries, it is still a cost and we must make the appropriate Journal Entry to record it

    Dr. Salaries Expense 1,250
    Cr. Salaries Payable 1,250


    Quote:

    Originally Posted by cahitmanhart
    6. The office equipment has a 5-year life with no salvage value and is being depreciated at $250 per month for 60 months.

    Here it is telling us how much depreciation expense to use, $250.

    So, the JE would be:

    Dr. Depreciation Expense 250
    Cr. Accumulated Depreciation—Office Equipment 250


    Quote:

    Originally Posted by cahitmanhart
    7. Invoices representing $3,000 of services performed during the month have not been recorded as of June 30.

    We forget to record invoices for services, so:

    Dr. Accounts Receivable 3,000
    Cr. Service Revenue 3,000



    Ok, now that we have done all that, we now go back to our trial balance and make the appropriate changes to it.

    ASTROMECH CONSULTING
    Adjusted Trial Balance
    June 30, 2007

    Debits
    Cash 6,850
    Accounts Receivable 7,000 + 3,000 = 10,000
    Prepaid Insurance 2,640 – 220 = 2,420
    Supplies 2,000 – 1,020 = 980
    Office Equipment 15,000
    Salaries Expense 4,000 + 1,250 = 5,250
    Rent Expense 2,000
    Supplies Expense 1,020
    Utilities Expense 180
    Insurance Expense 220
    Depreciation Expense 250
    Total Debits 44,170

    Credits
    Accounts Payable 4,540
    Unearned Service Revenue 5,200 – 2,900 = 2,300
    Common Stock 21,750
    Service Revenue 8,000 + 2,900 + 3,000 = 13,900
    Utilities Payable 180
    Salaries Payable 1,250
    Accumulated Depreciation—Office Equipment 250
    Total Credits 44,170


    As you can see, you now have an adjusted trial balance.
  • Sep 23, 2006, 02:58 PM
    cahitmanhart
    Wow, that makes so much sense, thank you so much
  • Sep 23, 2006, 06:49 PM
    CaptainForest
    You're welcome

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