How do you prepare the following adjusting, reversing and next period entry into an unadjusted trial balance?
I also need help with the rest of this problem. Cost of supplies still available December 31 is 2,700
The notes payable requires an interest payment to be made every 3 months. The amount of unrecorded accrued interest at Dec 31 is 1,250. The next interest payment at an amount of 1,500, is due on January 15.
To prepare an adjusting, reversing, and next period entry into an unadjusted trial balance, follow these steps:
1. Start with the unadjusted trial balance: Begin by listing all the accounts and their respective balances before any adjustments have been made. This trial balance should include all assets, liabilities, and equity accounts.
2. Make the adjusting entries: Adjusting entries are made to update the account balances and ensure accurate financial reporting. In this case, we have two adjusting entries to consider.
- Cost of supplies: The cost of supplies still available on December 31 is $2,700. To adjust this, we need to recognize the supplies used during the period. Assuming no beginning inventory, we can calculate the supplies used by subtracting the balance of $2,700 from the total cost of supplies purchased during the period. If you have that information, subtract it from $2,700 and record the amount as an expense in the trial balance.
- Accrued interest: The unrecorded accrued interest at December 31 is $1,250. To adjust this, we need to recognize the interest expense that has been incurred but not yet recorded. This accrued interest should be added to the notes payable and recorded as an expense in the trial balance.
3. Prepare reversing entries: Reversing entries are optional and are made to simplify the accounting process in the next period. If you need to prepare reversing entries, consult with your accounting guidelines or consult with your instructor for the appropriate steps.
4. Prepare entries for the next period: After completing the adjusting and reversing entries, you can make the necessary entries for the next period. In this case, the next interest payment of $1,500 is due on January 15. You should record this as an interest expense and as a decrease in notes payable in the trial balance for the next period.
Remember, it's important to consult with your accounting guidelines and instructor as specific requirements may vary. It's recommended to use accounting software or spreadsheets to organize and document your trial balance for accuracy and efficiency.