Problem 1:
Givens Graphics Company was organized on January 1, 2021, by Sue Givens. At the end of the first 6 months
of operations, the trial balance contained the accounts on the following.
Debits Credits
Cash $9500 Notes Payable $20,000
Accounts Receivable 14,000 Accounts Payable 9,000
Equipment 45,000 Sue Givens, Capital 22,000
Insurance Expense 1,800 Graphic Revenue 52,100
Salaries Expense 30,000 Consulting Revenue 6,000
Supplies 3,700
Advertising Expense 1,900
Rent Expense 1,500
Utilities Expense 1,700
$109,100 $109,100
Analysis reveals the following additional data.
1. The $3,700 balance in Supplies represent supplies purchased in January. At June 30, $2400 of supplies was
used.
2. The note payable was issued on February 1. It is a 9% yearly, 6-month note.
3. The balance in Insurance Expense is the premium on a one-year policy, dated March 1, 2021.
4. Consulting fees are credited to revenue when received. At June 30, consulting fees of $1,500 are unearned.
5. Graphic revenue earned but unrecorded at June 30 totals $2,000.
6. Depreciation is $2,000 per year.
Instructions
(i) Journalize the adjusting entries at June 30. (Assume adjustments are recorded every 6 months.)
(ii) Prepare an adjusted trial balance.
Givens Graphics Company
General Journal
Date Account Titles and Explanation Ref. Debit Credit
2021 Supplies expense 2400
June 30 Supplies 2400
(Adjusting the Supplies used)
June 30 Interest expense 900
Interest expense payable 900
June 30 Prepaid insurance expense 1200
Insurance expense 1200
June 30 Consulting Revenue 1500
Unearned revenue 1500
June 30 A/R 2000
Graphic revenue 2000
June 30 Depreciation 1000
Accumulated dep. 1000
Givens Graphics Company
Adjusted Trial Balance
June 30, 2021
Particulars Debit Credit
Cash 9500
A/R (14000+2000) 16000
Equipment 45000
Insurance expense (1800-1200) 600
Prepaid Insurance Expense 1200
Salaries Expense 30000
Supplies expense 2400
Supplies (3700-2400) 1300
Advertising Expense 1900
Rent Expense 1500
Utilities Expense 1700
Depreciation 1000
Accumulated depreciation 1000
Interest Expense 900
Interest Expense payable 900
Notes Payable 20000
A/P 9000
Sue Givens, Capital 22000
Graphic Revenue (52100+2000) 54100
Consulting Revenue (6000-1500) 4500
Unearned revenue 1500
113000 113000
Homework:
Do practice P3-1B, P3-2B, P3-3B, & P3-4B.