P 2-9 Accounting cycle; unadjusted trial balance through closing LO2-4, LO2-6, LO2-8
The unadjusted trial balance as of December 31, 2024, for the Bags Consulting Company appears below. December 31 is the company's reporting year-end.
Account Title Debits Credits
Cash $ 8,000
Accounts receivable 9,000
Prepaid insurance 3,000
Land 200,000
Buildings 50,000
Accumulated depreciation-buildings $ 20,000
Office equipment 100,000
Accumulated depreciation-office equipment 40,000
Accounts payable 35,050
Salaries payable 0
Deferred rent revenue 7,500
Common stock 200,000
Retained earnings 56,450
Service revenue 90,000
Interest revenue 3,000
Rent revenue 0
Salaries expense 37,000
Depreciation expense 0
Insurance expense 0
Utilities expense 30,000
Maintenance expense 15,000
Totals $452,000 $452,000
Required:
1. From the trial balance and information given, prepare adjusting entries.
a. The buildings have an estimated useful life of 50 years with no salvage value. The company uses the straight-line depreciation method.
b. The office equipment is depreciated at 10 percent of original cost per year.
c. Prepaid insurance expired during the year, $1,000.
d. Accrued salaries at year-end, $1,500.
e. Rent to customers who paid in advance has been provided for $6,300.
2. Post the beginning balances and adjusting entries into the appropriate T-accounts.
3. Prepare an adjusted trial balance.
4. Prepare closing entries.
5. Prepare a post-closing trial balance.