Preparing an Adjusted Trial Balance
Accounting Cycle | ||
1. Analyze Transactions | 5. Prepare Adjusting Journal Entries | 9. Prepare Closing Entries |
2. Prepare Journal Entries | 6. Post Adjusting Journal Entries | 10. Post Closing Entries |
3. Post journal Entries | 7. Prepare Adjusted Trial Balance | 11. Prepare Post-Closing Trial Balance |
4. Prepare Unadjusted Trial Balance | 8. Prepare Financial Statements |
Let's look at the company we have been using in our examples MicroTrain. The unadjusted trial balance is as follows:
Debit | Credit | |
Cash | 10,000 | |
Accounts Receivable | 20,000 | |
Supplies | 8,500 | |
Prepaid Insurance | 2,400 | |
Trucks | 40,000 | |
Accounts Payable | 25,000 | |
Unearned Revenue | 4,500 | |
Common Stock | 35,000 | |
Retained Earnings | 6,100 | |
Service Revenue | 30,000 | |
Salaries Expense | 18,000 | |
Rent Expense | 1,200 | |
Utilities Expense | 500 | |
TOTALS | 100,600 | 100,600 |
Debit | Credit | ||
1) Dec 31 | Accounts Receivable | 5,000 | |
Service Revenue | 5,000 | ||
To record December accrued revenue. | |||
2) Dec 31 | Interest Receivable | 600 | |
Interest Revenue | 600 | ||
To record December accrued interest revenue. | |||
3) Dec 31 | Salaries Expense | 360 | |
Salaries Payable | 360 | ||
To record salaries earned but not paid. | |||
4) Dec 31 | Unearned Revenue | 1,500 | |
Service Revenue | 1,500 | ||
To record deferred revenue now earned. | |||
5) Dec 31 | Insurance Expense | 200 | |
Prepaid Insurance | 200 | ||
To record one month of insurance expired. | |||
6) Dec 31 | Supplies expense | 7,000 | |
Supplies | 7,000 | ||
To record supplies used. | |||
7) Dec 31 | Depreciation Expense | 750 | |
Accumulated Depreciation - Trucks | 750 | ||
To record one month of depreciation. |
Once the posting is complete and the new balances have been calculated, we prepare the adjusted trial balance. As before, the adjusted trial balance is a listing of all accounts with the ending balances and in this case it would be adjusted balances.
Debit | Credit | |
Cash | 10,000 | |
Accounts Receivable | 25,000 | |
Interest Receivable | 600 | |
Supplies | 1,500 | |
Prepaid Insurance | 2,200 | |
Trucks | 40,000 | |
Accum. Depreciation-Trucks | 750 | |
Accounts Payable | 25,000 | |
Unearned Revenue | 3,000 | |
Salaries Payable | 360 | |
Common Stock | 35,000 | |
Retained Earnings | 6,100 | |
Service Revenue | 36,500 | |
Interest Revenue | 600 | |
Salaries Expense | 18,360 | |
Rent Expense | 1,200 | |
Utilities Expense | 500 | |
Insurance Expense | 200 | |
Supplies Expense | 7,000 | |
Depreciation Expense | 750 | |
TOTALS | 107,310 | 107,310 |
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