Page 157 - Accounting Principles (A Business Perspective)

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The information needed to prepare a balance sheet comes from the Balance Sheet columns of MicroTrain's work
sheet (Exhibit 20). As stated earlier, the correct amount for the ending retained earnings appears on the statement
of retained earnings. See the completed balance sheet for MicroTrain in Exhibit 23.

Journalizing adjusting entries

After completing MicroTrain's financial statements from the work sheet, you should enter the adjusting entries
in the general journal and post them to the appropriate ledger accounts. You would prepare these adjusting entries
as you learned in Chapter 3, except that the work sheet is now your source for making the entries. The preparation
of a work sheet does not eliminate the need to prepare and post adjusting entries because the work sheet is only an
informal accounting tool and is not part of the formal accounting records.
The numerical notations in the Adjustments columns and the adjustments explanations at the bottom of the
work sheet identify each adjusting entry. The Adjustments columns show each entry with its appropriate debit and
credit. MicroTrain's adjusting entries as they would appear in the general journal after posting are:
MICROTRAIN COMPANY
General Journal page3
Date Account Titles and Explanation Post. Debit Credit
Ref.
2010 Adjusting Entries
Dec. 31 Insurance Expense (-SE) 512 2 0 0
Prepaid Insurance (-A) 108 2 0 0
To record insurance expense for December.

31 Rent Expense (-SE) 515 4 0 0
Prepaid Rent (-A) 112 4 0 0
To record rent expense for December.

31 Supplies Expense (-SE) 518 5 0 0
Supplies on Hand (-A) 107 5 0 0
To record supplies used during December.

31 Depreciation Expense—Trucks (-SE) 521 7 5 0
Accumulated Depredation—Trucks (-A) 151 7 5 0
To record depreciation expense for December.

31 Unearned Service Fees (-L) 216 1 5 0 0
Service Revenue (+SE) 400 1 5 0 0
To transfer a potion of training fees from the liability account
to the revenue account.

31 Interest Receivable (+A) 121 6 0 0
Interest Revenue (+SE) 418 6 0 0
To record one month's interest revenue.

31 Accounts Receivable (+A) 103 1 0 0 0
Service Revenue (+SE) 400 1 0 0 0
To record unbilled training services performed in December.

Accounting Principles: A Business Perspective 158 A Global Text