Question

six-column table for JKL Company follows. The first two columns contain the unadjusted trial balancefor the company as of July 31, 2017. The last two columns contain the adjusted trial balance as of thesame date.

Required

Analysis Component

1. Analyze the differences between the unadjusted and adjusted trial balances to determine the eight adjustmentsthat likely were made. Show the results of your analysis by inserting these adjustmentamounts in the table’s two middle columns. Label each adjustment with a letter athrough hand providea short description of each.

Preparation Component

2. Use the information in the adjusted trial balance to prepare the company’s (a) income statement andits statement of retained earnings for the year ended July 31, 2017 [Note:Retained earnings at

July 31, 2016, was \(25,000, and the current-year dividends were \)5,000], and (b) the balance sheet

as of July 31, 2017.

Unadjusted Adjusted

Trial Balance Adjustments Trial Balance

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . \( 34,000 \) 34,000

Accounts receivable . 14,000 22,000

Office supplies 16,000 2,000

Prepaid insurance . 8,540 2,960

Office equipment 84,000 84,000

Accum. depreciation—

Office equip. . \( 14,000 \) 20,000

Accounts payable . 9,100 10,000

Interest payable 0 1,000

Salaries payable . 0 7,000

Unearned consulting fees 18,000 15,000

Long-term notes payable . 52,000 52,000

Common stock . 15,000 15,000

Retained earnings . 25,000 25,000

Dividends 5,000 5,000

Consulting fees earned . 123,240 134,240

Depreciation expense—

Office equip. . 0 6,000

Salaries expense 67,000 74,000

Interest expense . 1,200 2,200

Insurance expense . 0 5,580

Rent expense 14,500 14,500

Office supplies expense . 0 14,000

Advertising expense . 12,100 13,000

Totals . \(256,340 \)256,340 \(279,240 \)279,240

Short answer

The credit balance of the adjustments is $34,480.

Step-by-step solution

Step-by-Step SolutionStep 1: Definition of accounts receivable

Accounts receivable is the amount that is earned but not received.

Adjustments

Particulars	Unadjusted		Adjustment		Adjusted
	Debit	Credit	Debit	Credit	Debit	Credit
Cash	$34,000				$34,000
Accounts Receivable	$14,000		$6,000		$22,000
Office Supplies	$16,000			$14,000	$2,000
Prepaid Insurance	$8,540			5,580	$2,960
Office Equipment	$84,000				$84,0000
Accumulated Depreciation-Office Equipment		$14,000		$6,000		$20,000
Accounts Payable		$9,100		$900		$10,000
Interest Payable		$0		$1,000		$1,000
Salaries Payable		$0		$7,000		$7,000
Unearned Consulting Fees		$18,000	$3,000			$15,000
Long-term Notes Payable		$52,000				$52,000
Common Stock		$15,000				$15,000
Retained Earnings		$25,000				$25,000
Dividends	$5,000				$5,000
Consulting Fees Earned		$123,240				$134,240
Depreciation Expense- Office Equipment	$0				$6,000
Salaries Expense	$67,000				$74,000
Interest Expense	$1,200				$2,200
Insurance Expense	$0				$5,580
Rent Expense	$14,500				$14,500
Office Supplies Expense	$0				$14,000
Advertising Expense	$12,100				$13,000
Totals	$256,340	$256,340	$9,000	$34,480	$279,240	$279,240