The accountant for Eva’s Laundry prepared the following unadjusted and adjusted trial balances. Assume that all balances in the unadjusted trial balance

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, 2019 Unadjusted Adjusted Debit 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 Baldwin, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,300 110,300
Eva Baldwin, 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.


Answers:

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.
Debit Credit
Balances Balances
Cash7,500
Accounts Receivable23,250
Laundry Supplies750
Prepaid Insurance1,600
Laundry Equipment190,000
Accumulated Depreciation—Laundry Equipment61,000
Accounts Payable9,600
Wages Payable1,000
Eva Baldwin, Capital110,300
Eva Baldwin, Drawing28,775
Laundry Revenue187,100
Wages Expense50,200
Rent Expense25,575
Utilities Expense18,500
Depreciation Expense13,000
Laundry Supplies Expense3,000
Insurance Expense3,600
Miscellaneous Expense3,250
369,000 369,000