ADJUSTED TRIAL BALANCE I

3) Practical Example (Example Company S.A. — Balance Sheet as of 12/31/XXXX) A) Trial Balance (Pre-adjusted) Account Debit (USD) Credit (USD) Cash 15,000.00 Accounts Receivable 8,000.00 Supplies 1,200.00 Prepaid Insurance 2,400.00 Equipment 25,000.00 Salaries (Salary Expense) 12,000.00 Rent (Rent Expense) 6,000.00 Utilities (Utility Expense) 1,300.00 Interest Expense (Interest Expense) 4,600.00 Total Debits 75,500.00 --------------------------------- ------------: ------------: Accumulated Depreciation (Accumulated Depreciation) 4,000.00 Accounts Payable (AP) 6,500.00 Bank Notes Payable (Notes Payable) 10,000.00 Share Capital (Common Stock) 20,000.00 Retained Earnings (RE) 5,000.00 Service Revenue 30,000.00 Total Credit 75,500.00 The pre-adjusted balance balances: Debit = Credit = 75,500.00 USD. B) Adjusting Entries (Example) Let's assume that at year-end we identify these adjustments: Equipment Depreciation: Depreciation for the period = 1,000.00 Debit: Depreciation (Expense) 1,000 Credit: Accumulated Depreciation 1,000 Supplies Used: 200.00 of supplies were consumed Debit: Supplies Expense 200 Credit: Supplies 200 Expired Insurance: 600.00 of prepaid insurance expired Debit: Insurance Expense 600 Credit: Prepaid Insurance 600 Accrued Salaries: Salaries payable at year-end 500.00 Debit: Salaries (Expense) 500 Credit: Salaries Payable (Liability) 500 C) Adjusted Trial Balance After applying the adjustments, the accounts are as follows: Account Debit (USD) Credit (USD) Cash 15,000.00 Accounts Receivable 8,000.00 Supplies (Adjusted Balance) 1,000.00 Prepaid Insurance 1,800.00 Equipment 25,000.00 Salaries (Expense) 12,500.00 Rent (Expense) 6,000.00 Utilities (Expense) 1,300.00 Interest (Expense) 4,600.00 Depreciation (Expense) 1,000.00 Supplies Expense 200.00 Insurance Expense 600.00 Total Debit 77,000.00 --------------------------------- ------------: ------------: Accumulated Depreciation 5,000.00 Accounts Payable 6,500.00 Bank Note 10,000.00 Share Capital 20,000.00 Retained Earnings 5,000.00 Service Revenue 30,000.00 Salaries Payable 500.00 Total Credit 77,000.00 The adjusted balance also balances: Debit = Credit = 77,000.00 USD. This is the balance used to prepare the income statement and balance sheet. @MundoContable1938