ADJUSTING ENTRIES + ADJUSTED TRIAL BALANCE

The following is trial balance for Pioneer Advertising Agency

Before Adjustments
Account Titles
.Dr .Cr
Cash 15200
Advertising Supplies 2500
Prepaid Insurance 600
Office Equipment 5000
Notes Payable 5000
Accounts Payable 2500
Unearned Revenue 1200
C. R. Byrd, Capital 10000
C. R. Byrd, Drawing 500
Service Revenue 10000
Salaries Expense 4000
Rent Expense 900
28700 28700

:On Oct. 31 the following transaction it has been made

October 31, an inventory count reveals that $1,000 of supplies is still on ●
.hand
October 31, an analysis of the policy shows that $50 of insurance expires ●
.each month
October 31, depreciation on the office equipment is estimated to be $480 a ●
.year, or $40 per month
October 31, analysis reveals that $400 has been earned in October of the ●
.unearned revenue
October 31, the agency earned $200 for advertising services that were not ●
.billed to clients before October 31
.October 31, interest expense incurred but not paid, $50 ●

:Instructions
Prepare the Adjusting Entries .1
Prepare the Adjusting Trial Balance .2
Prepare an income statement, owners’ equity and balance sheet at .3
.Oct, 31, 20xx

Date Account Titles and Explanation .Dr .Cr

Advertising Supplies Expense 1,50
Oct.31
0
Advertising Supplies 1,50
0
)To record supplies used(
Oct.31 Insurance Expense 50
 Date Account Titles and Explanation .Dr .Cr
Prepaid Insurance 50
)To record insurance expired(
Oct.31 Depreciation Expense 40
Accumulated Depreciation - Office Equipment 40
)To record monthly depreciation(
Oct.31 Unearned Revenue 400
Service Revenue 400
)To record revenue for services provided(
Oct.31 Accounts Receivable 200
Service Revenue 200
)To accrue revenue for services provided(
Oct.31 Interest Expense 50
Interest Payable 50
)To accrue interest on notes payable(

Before After
Account Titles Adjustments Adjustments
.Dr .Cr .Dr .Cr
Cash 1520 1520
0 0
Accounts Receivable 200
Advertising Supplies 2500 1000
Prepaid Insurance 600 550
Office Equipment 5000 5000
.Accumulated Depreciation - Office Equip 40

Notes Payable 5000 5000

Accounts Payable 2500 2500
Interest Payable 50
Unearned Revenue 1200 800

C. R. Byrd, Capital 1000 1000

0 0
C. R. Byrd, Drawing 500 500
Service Revenue 1000 1060
0 0
Salaries Expense 4000 4000
Advertising Supplies Expense 1500
Rent Expense 900 900
Insurance Expense 50
Interest Expense 50
Depreciation Expense 40
2870 2870 2899 2899
 Before After
Account Titles Adjustments Adjustments
.Dr .Cr .Dr .Cr
0 0 0 0

PIONEER ADVERTISING AGENCY

INCOME STATEMENT
FOR THE MONTH ENDED OCTOBER 31, 20XX
:Revenues
Service revenue 1060
0
:Expenses
Salaries expense 4000
Advertising Supplies Expense 1500
)-(
Rent expense 900
Insurance Expense 50
Interest Expense 50
Depreciation Expense 40
Total expenses 6540
Net Income 4060
Net income of $4,060 shown on the income statement is
added to the beginning balance of owner’s capital in the
Owners’ Equity statement.

PIONEER ADVERTISING AGENCY

OWNERS’ EQUITY STATEMENT
FOR THE MONTH ENDED OCTOBER 31, 20XX
Capital, Oct. 1, 20xx 1000
0
:Add
)+(
Additional Investments 0
Net income 4060 4060
:Less )-(
Drawings 500 500
Owners’ Equity, Oct. 31, 20xx 1356
0

Net income of $4,060 carried forward from the income

statement to the Owners’ equity statement. The Owners’
equity of $13,560 at the end of the reporting period is shown
as the final total of the Owners’ equity column of the
Summary of Transactions.
 PIONEER ADVERTISING AGENCY
BALANCE SHEET
AT OCTOBER 31, 20XX
Assets
Cash 1520
0
Accounts Receivable 200
Advertising Supplies 1000
Prepaid Insurance 550
Office Equipment 5000
Accumulated Depreciation - Office Equipment )40(

Total Assets 2191

0
Liabilities and Owners’ Equity

Notes Payable 5000

Accounts Payable 2500
Interest Payable 50
Unearned Revenue 800

Owners’ Equity Oct. 31, 20xx 1356

0

Total Liabilities and Owners’ Equity 2191

0