Penny's Pool Service & Supply, Incorporated (PPSS) is completing the accounting process for the first year of operations ended on December 31. Transactions during the year have been journalized and posted. The following trial balance reflects the unadjusted balances on December 31:a.
Penny’s Pool Service & Supply, Incorporated
Trial Balance on December 31 (end of first year of operations)
Unadjusted Trial Balance
Debit Credit
Cash 41,765
Short-term investments 6,300
Accounts receivable 6,500
Interest receivable
Supplies 26,700
Prepaid expenses 7,600
Land 19,300
Equipment 83,800
Buildings 73,300
Accumulated depreciation
Accounts payable 5,400
Wages payable 530
Utilities payable
Unearned revenue 27,900
Interest payable
Income taxes payable
Notes payable (current) 5,300
Notes payable (non-current) 80,700
Common Stock 330
Additional paid-in capital 62,100
Retained earnings
Pool cleaning revenue 138,650
Interest revenue 125
Advertising expense 3,900
Wages expense 47,300
Supplies expense
Repairs expense 440
Utilities expense 3,400
Insurance expense
Depreciation expense
Property tax expense 730
Interest expense
Income taxes expense
Totals 321,035 321,035
a. PPSS owed $8,800 in wages to the office receptionist and three assistants for working the last 10 days in December. The employees will be paid in early next year.
b. On October 1 of the current fiscal year, PPSS received $27,900 from customers who prepaid pool cleaning service for one year beginning on November 1 of the current year.
c. The company received a $650 utility bill for December utility usage. It will be paid early next year.
d. PPSS borrowed $80,700 from a local bank on August 1, signing a one-year, 10 percent note. The note and interest are due on August 1 of next year.
e. On December 31, PPSS cleaned and winterized a customer's pool for $930, but the service was not yet recorded on December 31.
f. On November 1 of the current fiscal year, PPSS purchased a two-year insurance policy for $3,600, with coverage beginning on that date. The amount was recorded as Prepaid Expenses when paid.
g. On December 31, PPSS had $4,000 of pool cleaning supplies on hand after purchasing supplies costing $26,700 during the year from Pool Corporation, Incorporated.
h. PPSS estimated that depreciation on its buildings and equipment was $9,600 for the year.
i. At December 31, $240 of interest on investments was earned that will be received in the next year.
j. The company's income tax rate for the year was 22 percent.
Required: 2. Complete the trial balance spreadsheet (enter adjustments and transaction references and determine the adjusted balances)
Penny's Pool Service &Supply.Incorporated
Trial Balance on December 31(end of first year of operations) Unadjusted Trial Balance Adjustments Debit Credit References Debit Credit 41,765 6,300 6,500 (e) 930 240 26,700 (g) 7,600 (f 19,300 83,800 73,300 (h) 5,400 530(a) (c) 27,900(b) (d)
Adjusted Trial Balance Debit Credit
Cash Short-term investments Accounts receivable Interest receivable
Supplies Prepaid expenses Land Equipment Buildings Accumulated depreciation Accounts payable
Wages payable Utilities payable Unearned revenue Interest payable Income taxes payable
Notes payable (current)
5,300 80,700 330 62,100
Notes payable (noncurrent) Common Stock
Additional paid-in capital Retained earnings Pool cleaning revenue
138,650(b) (e) 125
Interest revenue
Advertising expense
3,900 47,300
Wages expense Supplies expense
(a) (g)
Repairs expense Utilities expense
440 3,400
(c) (n (h)
Insurance expense Depreciation expense Property tax expense
730
Interest expense Income taxes expense
(d)
Totals
321,035
321,035
1,170
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