The unadjusted trial balance as of December 31, 2021, for the Bagley Consulting Company appears below. December 31 is the company’s reporting year-end. Account Title Debits Credits Cash 12,500 Accounts receivable 9,750 Prepaid insurance 3,900 Land 250,000 Buildings 77,500 Accumulated depreciation—buildings 31,000 Office equipment 114,000 Accumulated depreciation—office equipment 45,600 Accounts payable 31,300 Salaries payable 0 Deferred rent revenue 0 Common stock 290,000 Retained earnings 50,100 Service revenue 92,500 Interest revenue 5,600 Rent revenue 7,200 Salaries expense 40,000 Depreciation expense 0 Insurance expense 0 Utilities expense 24,700 Maintenance expense 20,950 Totals 553,300 553,300
Information necessary to prepare the year-end adjusting entries appears below.
The buildings have an estimated useful life of 50 years with no salvage value. The company uses the straight-line depreciation method.
The office equipment is depreciated at 10 percent of the original cost per year.
Prepaid insurance expired during the year, $1,250.
Accrued salaries at year-end, $950.
Deferred rent revenue at year-end should be $500.
Required:
1. From the trial balance and information given, prepare to adjust entries.
2. Post the beginning balances and adjusting entries into the appropriate T-accounts.
3. Prepare an adjusted trial balance.
4. Prepare closing entries.
5. Prepare a post-closing trial balance.