Tar Heels Unlimited began business on January 1, 2026. During January, the following transactions occurred:
January 1 Issue common stock in exchange for $100,000 cash.
January 2 Purchase inventory on account for $35,000.
January 4 Pay an insurance company $2,400 for a 1-year insurance policy.
January 10 Sell inventory on account for $12,000. The cost of the inventory was $7,000.
January 15 Borrow $30,000 from a local bank and sign a note. Principal and interest at 10% annual rate are to be repaid
in 6 months.
January 20 Pay employees $6,000 in salaries for the first half of the month.
January 22 Sell inventory for $10,000 cash. The cost of the inventory was $6,000.
January 24 Pay $15,000 to suppliers for the inventory purchased on January 2.
January 26 Collect $6,000 on account from customers.
January 28 Pay $1,000 to the local utility company for January gas and electricity.
January 30 Pay $4,000 rent for the building. Of this amount, $2,000 is for January rent and $2,000 is for February
rent. Prepaid Rent and Rent Expense are debited for their appropriate amounts.
Required:
1. Record each transaction.
2. Record adjusting entries for (a) 1 month of expired insurance related to January 4 purchase, (b) 0.5 month of interest owed
related to January 15 borrowing, and (c) salaries payable at the end of January of $6,000.
3. Prepare an adjusted trial balance as of January 30, 2026. All accounts had a balance of $0 at the beginning of January.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3
Prepare an adjusted trial balance as of January 30, 2026. All accounts had a balance of $0 at the beginning of January.
TAR HEELS UNLIMITED
Adjusted Trial Balance
January 30, 2026
Accounts
Cash
Accounts Receivable
Inventory
Prepaid Rent
Prepaid Insurance
Accounts Payable
Salaries Payable
Interest Payable
Notes Payable
Common Stock
Sales Revenue
Cost of Goods Sold
Salaries Expense
Utilities Expense
Interest Expense
Rent Expense
Insurance Expense
Totals
Debit
Credit
S
OS
0
< Required 2
Required 3
