Question

The unadjusted trial balance of Avery Air Purification System at December 31, 2018, and the data needed for the adjustments follow. Account Title Prepaid Rent Cash Debit Credit Accounts Receivable Office Supplies Equipment Accumulated Depreciation—Equipment Accounts Payable Salaries Payable Unearned Revenue Common Stock Dividends Service Revenue Salaries Expense Rent Expense Depreciation Expense—Equipment Advertising Expense Supplies Expense Total Balance \( 7,100 \) 65,200 \( 65,200 20,000 39,300 2,700 15,900 19,100 2,400 1,400 \) 3,800 3,500 9,400 3,900 1,900 Adjustment data at December 31 follow: a. On December 15, Avery contracted to perform services for a client receiving \(2,700 in advance. Avery recorded this receipt of cash as Unearned Revenue. As of December 31, Avery has completed \)2,100 of the services. b. Avery prepaid two months of rent on December 1. (Assume the Prepaid Rent balance as shown on the unadjusted trial balance represents the two months of rent prepaid on December 1.) c. Avery used \(750 of office supplies during the month. d. Depreciation for the equipment is \)800. e. Avery received a bill for December’s online advertising, \(500. Avery will not pay the bill until January. (Use Accounts Payable.) f. Avery pays its employees weekly on Monday for the previous week’s wages. Its employees earn \)2,000 for a five-day workweek. December 31 falls on Wednesday this year. g. On October 1, Avery agreed to provide a four-month air system check (beginning October 1) for a customer for $2,800. Avery has completed the system check every month, but payment has not yet been received and no entries have been made. Requirements 1. Journalize the adjusting entries on December 31. 2. Using the unadjusted trial balance, open the T-accounts with the unadjusted balances. Post the adjusting entries to the T-accounts. 3. Prepare the adjusted trial balance. 4. How will Avery Air Purification System use the adjusted trial balance?

Short answer

T-accounts are as follows:

Cash
	$7,100
Bal.	$7,100

Accounts Receivable
	$19,100
(g)	$2,800
Bal.	$21,900

Office Supplies
	$1,400	$750	(c)
Bal.	$650

Prepaid Rent
	$2,400	$1,200	(b)
Bal.	$1,200

Equipment
	$20,000
Bal.	$20,000

Accumulated Depreciation- Equipment
		$3,800
		$800	(d)
		$4,600	Bal.

Accounts Payable
		$3,500
		$500	(e)
		$4,000	Bal.

Salaries Payable
		$1,200	(f)
		$1,200	Bal.

Unearned Revenue
(a)	$2,100	$2,700
		$600	Bal.

Common Stock
		$39,300
		$39,300	Bal.

Dividends
	$9,400
Bal.	$9,400

Service Revenue
		$15,900
		$2,100	(a)
		$2,100	(g)
		$20,100	Bal.

Salaries Expense
	$3,900
(f)	$1,200
Bal.	$5,100

Rent Expense
(b)	$1,200
Bal.	$1,200

Depreciation Expense-Equipment
(d)	$800
Bal.	$800

Advertising Expense
	$1,900
(e)	$500
Bal.	$2,400

Supplies Expense
(c)	$750
Bal,	$750

Step-by-step solution

Explanation on T-account

T account is prepared in the T style format, which records the changes in the accounts

Explanation on Adjusting Entries

Adjusting entries are the yearend entries, which are recorded to record the accrued revenues and expenses for the period.