Chapter 5
The Accounting Cycle: Adjustments
126
Review Exercise
Catherine Gordon is running her own proprietary business called CG Accounting. CG
Accounting provides bookkeeping services to small and mid-sized companies.The company
prepares financial statements on a monthly basis and was introduced in the review exercise in
chapter 4. Before you begin this exercise, familiarize yourself with the review exercise in chapter 4
because this is a continuation.
The journal entries for the month of June have already been entered in the journal and posted to
the ledger.The trial balance, before adjustments, is presented below.
CG Accounting
Trial Balance
June 30, 2016
Account Titles
DR
CR
Cash
$5,550
Accounts Receivable
4,600
Prepaid Insurance
1,200
Equipment
6,000
Accounts Payable
$2,750
Unearned Revenue
900
Bank Loan
3,050
Gordon, Capital
9,400
Gordon, Drawings
1,000
Service Revenue
3,600
Advertising Expense
450
Professional Fees Expense
900
Total
$19,700
$19,700
CG Accounting uses the following accounts and accounting numbers in its accounting records.
Account Description
Account #
ASSETS
Cash
101
Accounts Receivable
105
Prepaid Insurance
110
Equipment
120
Accumulated Depreciation
125
LIABILITIES
Accounts Payable
200
Interest Payable
205
Unearned Revenue
210
Bank Loan
215
OWNER’S EQUITY
Gordon, Capital
300
Gordon, Drawings
310
Income Summary
315
Account Description
Account #
REVENUE
Service Revenue
400
EXPENSES
Advertising Expense
500
Bad Debt Expense
505
Depreciation Expense
510
Insurance Expense
515
Interest Expense
520
Maintenance Expense
525
Office Supplies Expense
530
Professional Fees Expense
535
Rent Expense
540
Salaries Expense
545
Telephone Expense
550
Travel Expense
555
