Mint Cleaning Inc. prepared the following unadjusted trial balance at the end of
ID: 2409936 • Letter: M
Question
Mint Cleaning Inc. prepared the following unadjusted trial balance at the end of its second year of operations ending December 31 Account Titles Cash Accounts Receivable Prepaid Insurance Equipment Accumulated Depreciation Accounts Payable Common Stock Retained Earnings Sales Revenue Insurance Expense Salaries and Wages Expense Supplies Expense Debit Credit $ 53 15 5 110 15 106 12 116 0 25 41 Totals $249 $249 Other data not yet recorded at December 31: a. Insurance expired during the year, $3 b. Depreciation expense for the year, $2 C. Wages payable, $5 d. Income tax expense, $7.Explanation / Answer
Effect of adjusting entries: Asset = Liabilities + Equity Expense Event Prepaid insurance = Accumulated depreciation Wages payable Income tax payable + Retained Earnings Insurance Expense Depreciation Expense Salaries & Wages expense Income Tax expense Bal. 5 = + 25 a. -3 = + -3 3 b. = 2 + -2 2 c. = 5 + -5 5 d. = 7 + -7 7 Total 2 = 2 5 7 + -17 3 2 30 7 Adjusted Trial balance: Account titles Debit Credit Cash 53 Accounts receivable 15 Prepaid insurance 2 Equipment 110 Accumulated depreciation 2 Accounts payable 15 Wages payable 5 Income tax payable 7 Common stock 106 Retained Earnings 12 Sales revenue 116 Insurance Expense 3 Salaries & Wages expense 30 Supplies expense 41 Depreciation Expense 2 Income Tax expense 7 263 263 Statement of retained earnings: Beginning balance, January 1 12 Add: Net income (Note:1) 33 Ending balance, December 31 45 Notes 1. Net income Sales revenue 116 Less: Expenses Insurance Expense 3 Salaries & Wages expense 30 Supplies expense 41 Depreciation Expense 2 Income Tax expense 7 83 Net income 33 Balance sheet Liabilities and stock holders equity Assets Current liabilities: Current assets: Accounts payable 15 Cash 53 l Wages payable 5 Accounts receivable 15 Income tax payable 7 Prepaid insurance 2 27 70 Stockholder's equity: Fixed asets: Common stock 106 Equipment 110 Retained earnings 45 Less:Accumulated depreciation 2 151 108 Total 178 178