Chapter 5
The Accounting Cycle: Adjustments
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At the end of June 2016, CG Accounting had to make the following adjustments.
Jun 30 The prepaid insurance represents a one-year policy that started in June. One month
has now been used.
Jun 30 When examining the balance of unearned revenue, Catherine determined that $450
has now been earned.
Jun 30 Interest has accrued on the balance of the bank loan for the month.The loan interest
rate is 10%. (For simplicity, round the interest to the nearest whole number.)
Jun 30 Depreciation on the equipment for the month must be recorded.The equipment is
depreciated using the straight-line method.The equipment is expected to last five
years and will have no residual value
Jun 30 Catherine started an audit for a new client.The contract is for 20 days of work
starting June 21. At the end of the contract, the client will pay CG Accounting
$1,800. Accrue the revenue earned for June.
Required
a) Complete the worksheet.
b) Complete the journal entries for the adjusting entries and post them to the general
ledger.
See Appendix I for solutions.
a) Complete the worksheet.
CG Accounting
Worksheet
June 30, 2016
Unadjusted
Trial Balance
Adjustments
Adjusted
Trial Balance
Account Titles
DR
CR
DR
CR
DR
CR
Cash
$5,550
Accounts Receivable
4,600
Prepaid Insurance
1,200
Equipment
6,000
Accumulated Depreciation
$0
Accounts Payable
2,750
Interest Payable
0
Unearned Revenue
900
Bank Loan
3,050
Gordon, Capital
9,400
Gordon, Drawings
1,000
Service Revenue
3,600
Advertising Expense
450
Depreciation Expense
0
Insurance Expense
0
Interest Expense
0
Rent Expense
900
Total
$19,700 $19,700
