Question

Jaguar Auto Company provides general car maintenance to customers. The company's fiscal year-end is December 31. The December 31, 2018, trial balance (before any adjusting entries) appears below. Accounts Debits Credits Cash $ 15,500 Accounts Receivable 13.700 Supplies 20,500 Prepaid Insurance 16,200 Equipment 82,000 Accumulated Depreciation $ 25,500 Accounts Payable 10,700 Salaries Payable 0 Utilities Payable 0 Interest Payable 0 Notes Payable 28,500 Common Stock 22,000 Retained Earnings 8,700 Dividends 1,700 Service Revenue 216,400 Salaries Expense 151,500 Depreciation Expense 0 Insurance Expense Supplies Expense Utilities Expense 10,700 Interest Expense 0 Totals $311,800 $ 311,800 Information necessary to prepare the year-end adjusting entries appears below. a. Depreciation on the machines for the year is $8,700. b. Employee salaries are paid every two weeks. The last pay period ended on December 23. Salaries earned from December 24 through December 31, 2018, are $2,700. c. On September 1, 2018, Jaguar borrows $28,500 from a local bank and signs a note. The note requires interest to be paid annually on August 31 at 12%. The principal is due in five years. d. On March 1, 2018, the company purchases insurance for $16,200 for a one-year policy to cover possible injury to mechanics. The entire $16,200 was debited to Prepaid Insurance at the time of the purchase. e. $3,700 of supplies remains on hand at December 31, 2018. f. On December 30, Jaguar receives a utility bill of $1,550 for the month. The bill will not be paid until early January 2019, and no entry was recorded when the bill was received.

Answer 1

1. 2 & 3) T-Accounts
Cash					Accounts Receivable
Beg. Bal.	$15,500				Beg. Bal.	$13,700
End. Bal.	$15,500				End. Bal.	$13,700
Supplies					Prepaid Insurance
Beg. Bal.	$20,500				Beg. Bal.	$16,200
		$16,800	e) $20,500 - $3,700				$13,500	d)
End. Bal.	$3,700				End. Bal.	$2,700
Equipment					Accumulated Depreciation
Beg. Bal.	$82,000				Beg. Bal.		$25,500
							$8,700	a)
End. Bal.	$82,000				End. Bal.	$34,200
Accounts Payable					Salaries Payable
Beg. Bal.		$17,700			Beg. Bal.		$0
							$2,700	b)
End. Bal.		$17,700			End. Bal.		$2,700
Utilities Payable					Interest Payable
Beg. Bal.		$0			Beg. Bal.		$0
		$1,550	f)				$1,140	c)
End. Bal.		$1,550			End. Bal.		$1,140
Notes Payable					Common Stock
Beg. Bal.		$28,500			Beg. Bal.		$22,000
End. Bal.		$28,500			End. Bal.		$22,000
Retained Earnings					Dividends
Beg. Bal.		$8,700			Beg. Bal.	$1,700
Dividends	$1,700	$9,810	Inco.Sum.
Inco.Sum.							$1,700	Retai. Ear.
End. Bal.		$16,810			End. Bal.	$0
Service Revenue					Salaries Expense
Beg. Bal.		$216,400			Beg. Bal.	$151,500
					b)	$2,700
Inco.Sum.	$216,400						$154,200	Inco.Sum.
End. Bal.		$0			End. Bal.	$0
Depreciation Expense					Insurance Expense
Beg. Bal.	$0				Beg. Bal.	$0
a)	$8,700				d) $16,200/12*10)	$13,500
							$13,500	Inco.Sum.
End. Bal.					End. Bal.	$0
Supplies Expense					Utilities Expense
Beg. Bal.	$0				Beg. Bal.	$10,700
e)	$16,800				f)	$1,550
							$12,250	Inco.Sum.
		$16,800	Inco.Sum.
End. Bal.	$0				End. Bal.	$0
Interest Expense					Income Summary
Beg. Bal.	$0				Sala. Ex.	$154,200	$216,400	Ser. Rev.
c) $28,500*12/100*4/12)	$1,140				Dep. Exp.	$8,700
					Insu. Exp.	$13,500
		$1,140	Inco.Sum.		Sup. Exp.	$16,800
					Util. Exp.	$12,250
End. Bal.	$0				Int. Exp.	$1,140
					Retai. Ear.	$9,810
					End. Bal.	$0