Ex 3-27 Adjusting entries from trial balances

The accountant for Eva’s Laundry prepared the following unadjusted and adjusted trial balances. Assume that all balances in the unadjusted trial balance and the amounts of the adjustments are correct. Identify the errors in the accountant’s adjusting entries, assuming that none of the accounts were affected by more than one adjusting entry.


Eva’s Laundry Trial Balances May 31, 2014
Unadjusted Adjusted Debit  Balances Credit Balances Debit  Balances Credit Balances Cash ............................................. 7,500 7,500 Accounts Receivable............................... 18,250 23,250 Laundry Supplies.................................. 3,750 6,750 Prepaid Insurance* ................................ 5,200 1,600 Laundry Equipment ............................... 190,000 177,000 Accumulated Depreciation—Laundry Equipment.... 48,000 48,000 Accounts Payable ................................. 9,600 9,600 Wages Payable.................................... 1,000 Eva Bruns, Capital ................................. 110,300 110,300 Eva Bruns, Drawing................................ 28,775 28,775 Laundry Revenue.................................. 182,100 182,100 Wages Expense ................................... 49,200 49,200 Rent Expense ..................................... 25,575 25,575 Utilities Expense .................................. 18,500 18,500 Depreciation Expense ............................. 13,000 Laundry Supplies Expense ......................... 3,000 Insurance Expense ................................ 600 Miscellaneous Expense ............................ 3,250 3,250 350,000 350,000 358,000 351,000 * $3,600 of insurance expired during the year.

Answer:
1.  The accountant debited Accounts Receivable for $5,000 but did not credit Laundry Revenue. This adjusting entry represents accrued laundry revenue.
2.  The accountant debited rather than credited Laundry Supplies for $3,000.
3.  The accountant credited the prepaid insurance account for $3,600, but debited the insurance expense account for only $600.
4.  The accountant credited Laundry Equipment for the depreciation expense of $13,000, instead of crediting the accumulated depreciation account.
5.  The accountant did not debit Wages Expense for $1,000.


The corrected adjusted trial balance is shown below. 
EVA'S LAUNDRY Adjusted Trial Balance May 31, 2014  Debit Balances 
Credit Balances 
Cash 7,500  Accounts Receivable 23,250  Laundry Supplies 750  Prepaid Insurance 1,600  Laundry Equipment 190,000  Accumulated Depreciation—Laundry Equipment  61,000 Accounts Payable  9,600 Wages Payable  1,000 Eva Bruns, Capital  110,300 Eva Bruns, Drawing 28,775  Laundry Revenue  187,100 Wages Expense 50,200  Rent Expense 25,575  Utilities Expense 18,500  Depreciation Expense 13,000  Laundry Supplies Expense 3,000  Insurance Expense 3,600  Miscellaneous Expense 3,250   369,000 369,000