Determining Adjustments

p13. Gonzales Upholstery’s trial balance at the end of its fiscal year follows.

 

 

gonzales Upholstery trial Balance September 30, 2014

 

Cash	16,288	Â
Accounts Receivable	16,494
Prepaid Insurance	1,900
Upholstery Supplies	4,370
Land	18,000
Building	125,000
Accumulated Depreciation—Building	Â	Â	26,300
Accounts Payable	Â	Â	17,400
Unearned Upholstery Revenue	Â	Â	1,600
Mortgage Payable	Â	Â	90,000
C. Gonzales, Capital	Â	Â	7,756
C. Gonzales, Withdrawals	10,000	Â	Â
Upholstery Revenue	Â	Â	157,634
Wages Expense	81,930	Â	Â
Upholstery Equipment Rental Expense	6,000	Â	Â
Delivery Truck Expense	4,374	Â	Â
Interest Expense	9,300	Â	Â
Other Expenses	7,034	Â	Â
Â	300,690	Â	300,690

 

 

The following information is also available:

a.     A study of the company’s insurance policies shows that $380 is unexpired at the end of the year.

b.     An inventory of upholstery supplies shows $1,040 on hand.

c.      Estimated depreciation on the building for the year is $9,800.

d.     Accrued interest on the mortgage payable is $960.

e.      On September 1, the company signed a contract, effective immediately, with County Community Bank to repair and reupholster office furniture, for a fixed monthly charge of $400. The bank paid for four months’ service in advance.

f.      Sales and delivery wages are paid on Saturday. The weekly payroll is $1,530. September 30 falls on a Thursday, and the company has a six-day pay week.

 

REQUIRED

All adjustments affect one balance sheet account and one income statement account. For each of the above situations, show the accounts affected, the amount of the adjustment (using a 1 or 2 to indicate an increase or decrease), and the balance of the account after the adjustment in the following format:

 

Balance	Amount of	Balance	Income	Amount of	Balance
Sheet	Adjustment	After	Statement	Adjustment	After
Account	(+ or –)	Adjustment	Account	(+ or –)	Adjustment