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Question: option 1 preparing adjusting entries in a worksheet following is...

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Option #1: Preparing Adjusting Entries in a Worksheet

Following is the unadjusted trial balance of Skylar Gaming, Inc. at the end of its first year of operations, December 31, 20x7:

Account Name

DR.

CR.

Cash

$71,550

Accounts Receivable

$25,200

Supplies

$550

Prepaid Insurance

$12,000

Equipment

$31,750

Accumulated Depreciation-Equipment

$4,050

Accounts Payable

$6,700

Salaries Payable

$0

Unearned Revenue

$2,200

Common Stock

$45,700

Retained Earnings

$23,850

Dividends

$3,500

Revenue

$80,750

Depreciation Expense-Equipment

$2,000

Salaries Expense

$4,750

Insurance Expense

$3,100

Rent Expense

$4,200

Supplies Expense

$2,500

Utilities Expense

$2,150

$163,250

$163,250

The following additional information is available:

  1. Skylar Gaming, Inc. needs to accrue $2,000 in salaries that will not be paid until next month.
  2. Skylar Gaming, Inc. has earned $2,000 of the services that were paid for in advance as included in the unearned revenue account.
  3. At the end of the period, Skylar Gaming, Inc. has provided services in the amount of $500 to another customer (John Gartner). However, Skylar has not billed them yet since they only issue bills at the beginning of each month.
  4. Skylar Gaming, Inc. needs to record the annual $1,025 of depreciation on the equipment.
  5. One month of the 12-month insurance policy in prepaid insurance has been used up, and a journal entry is needed to reflect this.
  6. At the end of the period, $125 in supplies are remaining.

Required:

  1. Prepare all necessary adjusting entries at December 31, 20x7 Descriptions are not needed.
  2. Using the below linked template prepare an adjusted trial balance at December 31, 20x7.
  3. Using a worksheet template, prepare an income statement, statement of retained earnings, and a balance sheet.
  4. Prepare closing entries including descriptions.
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