Switch each adjustment on and trace it from the unadjusted column to the adjusted column.
| Account | Unadjusted trial balance | Adjustments | Adjusted trial balance | |||
|---|---|---|---|---|---|---|
| Dr. | Cr. | Dr. | Cr. | Dr. | Cr. | |
| 101Cash | $4,350 | $4,350 | ||||
| 106Accounts receivable | (f) 1,800 | 1,800 | ||||
| 126Supplies | 9,720 | (b) 1,050 | 8,670 | |||
| 128Prepaid insurance | 2,400 | (a) 100 | 2,300 | |||
| 167Equipment | 26,000 | 26,000 | ||||
| 168Accumulated depreciation—Equipment | (c) 375 | 375 | ||||
| 201Accounts payable | 6,200 | 6,200 | ||||
| 209Salaries payable | (e) 210 | 210 | ||||
| 236Unearned consulting revenue | 3,000 | (d) 250 | 2,750 | |||
| 307Common stock | 30,000 | 30,000 | ||||
| 319Dividends | 200 | 200 | ||||
| 403Consulting revenue | 5,800 | (d) 250(f) 1,800 | 7,850 | |||
| 406Rental revenue | 300 | 300 | ||||
| 612Depreciation expense—Equipment | (c) 375 | 375 | ||||
| 622Salaries expense | 1,400 | (e) 210 | 1,610 | |||
| 637Insurance expense | (a) 100 | 100 | ||||
| 640Rent expense | 1,000 | 1,000 | ||||
| 652Supplies expense | (b) 1,050 | 1,050 | ||||
| 690Utilities expense | 230 | 230 | ||||
| Totals | $45,300 | $45,300 | $3,785 | $3,785 | $47,685 | $47,685 |
Trace an adjustment above to see what it does to the totals.
An is the list of accounts and balances before the six entries post. Post them and list the accounts again — that is the , the sheet every statement below is built from. Wild lays the two out side by side with the adjustments between them, keyed by letter; copying that layout onto scratch paper is worth doing on an exam.
Dollar signs appear only on the first and last amount in a column of a trial balance or statement — never in a journal or ledger. A single rule sits above a subtotal; a double rule sits under a final total.
Hover or focus any line and follow it to the statement it lands on.
Hover any line. Revenues and expenses go to the income statement; net income carries to retained earnings; ending retained earnings carries to the balance sheet.
| Account | Debit | Credit |
|---|---|---|
| 101Cash | $4,350 | |
| 106Accounts receivable | 1,800 | |
| 126Supplies | 8,670 | |
| 128Prepaid insurance | 2,300 | |
| 167Equipment | 26,000 | |
| 168Accumulated depreciation—Equipment | 375 | |
| 201Accounts payable | 6,200 | |
| 209Salaries payable | 210 | |
| 236Unearned consulting revenue | 2,750 | |
| 307Common stock | 30,000 | |
| 319Dividends | 200 | |
| 403Consulting revenue | 7,850 | |
| 406Rental revenue | 300 | |
| 612Depreciation expense—Equipment | 375 | |
| 622Salaries expense | 1,610 | |
| 637Insurance expense | 100 | |
| 640Rent expense | 1,000 | |
| 652Supplies expense | 1,050 | |
| 690Utilities expense | 230 | |
| Totals | $47,685 | $47,685 |
| Revenues | |
| Consulting revenue | $7,850 |
| Rental revenue | 300 |
| Total revenues | 8,150 |
| Expenses | |
| Depreciation expense—Equipment | 375 |
| Salaries expense | 1,610 |
| Insurance expense | 100 |
| Rent expense | 1,000 |
| Supplies expense | 1,050 |
| Utilities expense | 230 |
| Total expenses | 4,365 |
| Net income | $3,785 |
| Retained earnings, Dec. 1 | $0 |
| Add: Net income | 3,785 |
| 3,785 | |
| Less: Dividends | 200 |
| Retained earnings, Dec. 31 | $3,585 |
| Assets | |
| Cash | $4,350 |
| Accounts receivable | 1,800 |
| Supplies | 8,670 |
| Prepaid insurance | 2,300 |
| Equipment | 26,000 |
| Less: Accumulated depreciation—Equipment | (375) |
| Total assets | $42,745 |
| Liabilities | |
| Accounts payable | $6,200 |
| Salaries payable | 210 |
| Unearned consulting revenue | 2,750 |
| Total liabilities | 9,160 |
| Equity | |
| Common stock | 30,000 |
| Retained earnings | 3,585 |
| Total equity | 33,585 |
| Total liabilities and equity | $42,745 |
Prepare the three statements in order, because each feeds the next. The income statement turns revenues and expenses into net income. The statement of retained earnings takes that net income, subtracts dividends, and produces ending retained earnings. The balance sheet takes assets and liabilities plus that ending retained earnings — and it has to balance: assets equal liabilities plus equity.