[Jenilee]

The list of accounts below and the unadjusted balances of these accounts were taken
from the ledger of the Manville Corporation at the end of their accounting period,
March 31, 20X2:
Cash $ 3,995
Accounts Receivable 13,240
Allowance for Doubtful Accounts 120
Inventory—April 1, 20X1 22,800
Prepaid Insurance 360
Supplies on Hand 520
Equipment 15,000
Accumulated Depreciation—Equipment 4,500
Accounts Payable 11,870
Taxes Payable 390
Capital Stock 25,000
Retained Earnings 11,920
Dividends 9,000
Sales 89,490
Sales Returns and Allowances 920
Sales Discounts 1,330
Purchases 56,320
Purchase Returns and Allowances 490
Purchase Discounts 1,125
Transportation-In 880
Sales Salaries 11,800
Rent Expense 3,600
Advertising Expense 2,700
Utilities Expense 1,880
Maintenance Expense 560
Additional data:
a. Merchandise inventory at March 31, 20X2, was $23,300.
b. The Allowance for Doubtful Accounts should be increased by $600.
c. Prepaid insurance represents a three-year policy purchased April 1, 20X1.
d. Supplies on hand were estimated to be $170 on March 31, 20X2.
e. The cost of the equipment is being depreciated over a 15-year estimated life using
the straight-line method. Salvage value should be ignored.
f. Unpaid sales salaries on March 31, 20X2, amounted to $200.

1. Prepare a worksheet
2. Prepare an income statement
3. Prepare a statement of retained earnings
4. Prepare a balance sheet
5. Prepare the closing entries

[Just Looking]

This will be similar to your other question. Start with your journal entries, and that will give you your adjusted trial balance.

[Jenilee]

I got these answers
a. dr allowance for doubtful acct 400
Cr accts rec 400
b. dr merchandise inventory 2025
Cr accts rec 2025
c. dr insurance exp 220
Cr unexpired insurance 220
D dr accts pay 145
Cr supplies on hand 145

[Jenilee]

e. Dr building dep 300
Cr acc dep building 300
f. dr office dep 210
Cr acc dep office 210

g. dr salaries exp 400
Cr salaries pay 400
Would these adjustments be correct?

[Jenilee]

Sorry those were for the other accounting question I needed help with

[Just Looking]

I will answer these on the other question.

[Jenilee]

For these adjustments I got
a. dr inventory march 31, 20X2 $23 300

b. dr bad expense $400
cr allowance for doubtful accounts $400

c. dr prepaid insurance $120
cr insurance expense $120

d. dr supplies expense $350
cr supplies on hand $350

e. dr depreciation expense - equipment $1000
cr accumulated depreciation - equipment $100

f. dr sales salaires $200
cr cash $200

Would these adjustments be correct?

[Just Looking]

a) Current balance in Inventory is $22,800. Actual inventory is $23,300. You need to debit Inventory $500, and cr Purchases $500.

b) Your debit and credit accounts are fine, but it looks like you are using the dollar amount from the other question. They say they want it increased by $600, so your dr and cr should be for $600.

c) Dr and cr accounts are backwards; amount is right. You want to write off the $360 over 3 years. Insurance is an expense and should be debited. The Prepaid Insurance is an asset that will be written off over 3 years, until the value is zero. You want to credit it $120 for each of the 3 years.

d) correct

e) correct

f) The dr is correct. You are accruing the cost, not actually paying it at this time. The credit should be Salaries Payable.

Please ask if you need further explanation. Thanks.

[Jenilee]

With those adjustments being posted to the right accounts. Don't I have to make sure both the debit and the credit colums are balanced? Because with those adjustments I'm still not balanced

[Just Looking]

Yes, they have to be balanced. Do you have a link to your spreadsheet? Check to be sure your beginning trial balance is in balance. I checked one the other day for a poster where they entered the total columns instead of calculating them and had made a mistake on entry. Check that your adjustments are equal in debits and credits. If they aren't, one of your entries isn't posted correctly. With the adjustments above, each one has a dr and cr of equal value. Is that the way they got posted?

[Jenilee]

No I don't. And it wasn't balanced before I did the adjustments - different was 23600
debit column accounts were:
cash 3995
acct. rec. 13240
inventory April 1 20x1 22800
prepaid insurance 360
supplies on hand 520
equipment 15000
dividends 9000
sales returns and allowances 920
sales discounts 1330
purchases 56320
transportation in 880
rent expense 3600
advertising expense 2700
utilities expense 1880
maintenance expense 560
Debits = 133105

credit column
allowance for doubtful accounts 120
acc dep equipment 4500
accts pay 11870
taxes payable 390
capital stock 25000
retained earnings 11920
sales 89490
purchases returns and allowances 490
purchase discounts 1125
sales salaries 1180
total creidts = 156705
Difference 23600
So I was never balanced from the start..

[Just Looking]

First let's find out why your original trial balance is not in balance. Were you given the numbers? I copied the original TB into Excel and spread the debits and credits. My credits equal $146,085 versus $133,105 in assets. The difference is $12,980. Is it possible there is a balance of this amount (a debit) that got left off?

I also see that Sales Salaries of $1180 are in the credit column. If that title is correct, Salaries is an expense and should have a debit balance, in which case the debits and credits are now $10,620 different.

[Jenilee]

Yes I was given the original numbers, the ones I just sent you. The adjustments. I don't know why they aren't balanced from the original trial balance

[Just Looking]

The first thing to do is check what you were given vs. what you put in your post. Was it given to you in the form of a trial balance? Is there a way you can link it in here? Did they really show the sales salaries as a credit - that doesn't make sense? When you have a difference like this, the first thing to do is look at the amount of the difference and see if you have an account you forgot to show - it's an easy mistake? The second is to take 1/2 of the number and see if something is listed as a credit vs debit, or vice versa. If you were given the original numbers before adjustment, there should be a reason. I'd like to look at the original input they gave you if possible.

[Just Looking]

I just found it. In your original question, you have Sales Salaries as $11,880 credit. That should be a debit. In the post later on, you show it as a credit of $1,180. In your original TB, correct the Sales Salaries to be a debit of $11,880 dr and you are in balance.

cash 3995
acct. rec. 13240
inventory April 1 20x1 22800
prepaid insurance 360
supplies on hand 520
equipment 15000
dividends 9000
sales returns and allowances 920
sales discounts 1330
purchases 56320
transportation in 880
rent expense 3600
advertising expense 2700
utilities expense 1880
maintenance expense 560
sales salaries 11800
Debits = 144905

credit colum
allowance for doubtful accounts 120
acc dep equipment 4500
accts pay 11870
taxes payable 390
capital stock 25000
retained earnings 11920
sales 89490
purchases returns and allowances 490
purchase discounts 1125

total credits = 144905

ETA: Once you do that, add two columns for your adjustments. I gave you a link to a spreadsheet that shows how it should look. You can then be sure your adjustments are equal in doctors and crs before coming up with your adjusted TB.

[Just Looking]

Jennilee, I just wanted to point something out. I was doing this at work and just peeking in or I would have caught it sooner. When you have mistakes, there are a couple of quick ways to find them. You knew you were off by $23,600. If you divide that by 2, you get $11,800. The first thing to do is see if you have a balance of $11,800 that could be a problem. In your example, the Sales Salaries was $11,800 - so you take a look at that and see if it's where the mistake is. In this case, it should have been a debit not a credit - and then you are in balance.

Another trick is to look at the difference, and see if there is an entry for that amount that got missed entirely.

A third trick is whenever you are off by a multiple of 9 you look for a transposition error - another easy mistake to make. For example, you should have entered 54 and you entered 45 - a difference of 9. It can be any multiple of 9, so if you should have entered 360 and you entered 630, you are off by a difference of 270.

These are important tricks to know because it is so easy to make an error and can take a while to find.