The trial balance of Bair Company includes the following balance sheet accounts. Identify the accounts that require adjustment. For each account that requires adjustment, indicate (a) the type of adjusting entry (prepaid expenses, unearned revenues, accrued revenues, and accrued expenses) and (b) the related account in the adjusting entry.
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In order to identify the accounts that require adjustment, you need to review each balance sheet account listed in the trial balance and check for any potential issues or discrepancies. Here are the steps you can follow to identify the accounts that require adjustment:
1. Obtain a copy of the trial balance for Bair Company.
2. Identify all the balance sheet accounts listed in the trial balance. These accounts typically include assets, liabilities, and equity accounts.
3. Review each balance sheet account for any potential issues that may indicate a need for adjustment. Some common issues to look out for include:
a. Prepaid Expenses: Check if any expenses have been paid in advance, such as insurance premiums or rent.
b. Unearned Revenues: Look for any revenues that have been received in advance but have not yet been earned, such as customer deposits or prepaid subscriptions.
c. Accrued Revenues: Check for any revenues that have been earned but not yet recorded, such as accrued interest or accounts receivable that have not been billed.
d. Accrued Expenses: Look for any expenses that have been incurred but not yet recorded, such as unpaid wages or accrued utilities.
4. Make a list of the accounts that show potential issues or discrepancies.
5. For each account that requires adjustment, identify the type of adjusting entry needed and the related account in the adjusting entry.
By following these steps, you should be able to identify the accounts that require adjustment in the trial balance of Bair Company and determine the appropriate adjusting entries for each account.