To create an unadjusted trial balance, we first need to analyze the transactions and determine the balances in various accounts based on the entries made. Here’s a summary of the key accounts involved:
Account Categories:
-
Assets:
- Cash
- Accounts Receivable
- Office Supplies
- Prepaid Rent
- Prepaid Insurance
- Vehicle (Equipment)
- Office Repairs (if considered an expense rather than an asset)
-
Liabilities:
- Accounts Payable
- Loan Payable
- Wages Payable
-
Equity:
- Owner's Capital
- Owner's Withdrawals
-
Revenue:
- Service Revenue
-
Expenses:
- Rent Expense
- Advertising Expense
- Wages Expense
- Depreciation Expense
- Telephone Expense
- Office Repairs Expense
Transactions and Balances:
-
Cash:
- Contributions: +$50,000 (initial contribution)
- Loan Received: +$25,000
- Rent Paid: –$7,170 (rent for June and prepaid for 6 months, $1,195*6)
- Advertising Paid: –$250
- Wages Paid: –$325
- Withdrawal: –$1,000
- Payment for Supplies: –$750
- Customer Payments: +$1,750 ($750 + $1,000)
- Service Revenue received: +$800
- Vehicle Purchase: –$15,000
- Plumbing Repairs: –$210
Ending Cash Balance = $50,000 + $25,000 - $7,170 - $250 - $325 - $1,000 - $750 + $1,750 + $800 - $15,000 - $210 = $53,795
-
Accounts Receivable:
- For services performed: $1,000 (June 6) + $750 (June 9) + $2,225 (June 29) = $4,975
- Customer paid $1,000 for the June 6 services: –$1,000
Ending Accounts Receivable = $4,975 - $1,000 = $3,975
-
Prepaid Rent:
- Total rent for 6 months: $1,195 * 6 = $7,170 (asset)
-
Office Supplies:
- Purchased on account: $750
- Paid off on June 28: (not included in the supplies balance)
Total Office Supplies = $750
-
Vehicle (Equipment):
- Vehicle Purchase: $15,000
- Less: Depreciation: –$250
Ending Vehicle Balance = $15,000 - $250 = $14,750
-
Wages Payable:
- Wages due on June 15: $325
- Wages for June 30: $325
Total Wages Payable = $325 + $325 = $650
-
Loan Payable:
- Small business loan: $25,000
-
Owner's Capital:
- Initial Capital Contribution: $50,000.
-
Owner's Withdrawals:
- Withdrawals for personal use: $1,000.
-
Service Revenue:
- Total Revenue = $1,000 (June 6) + $1,500 (June 9) + $800 (June 25) + $2,225 (June 29) = $5,525
- Expenses:
- Rent Expense: $1,195 (for June)
- Advertising Expense: $250
- Wages Expense: $325 (June 15 wages paid)
- Telephone Expense: $155
- Depreciation Expense: $250
- Office Repair Expense: $210
Unadjusted Trial Balance:
Now that we have the balances, we can set up the unadjusted trial balance:
| Account | Debit | Credit | |----------------------------------------------|-------------|-------------| | Cash | $53,795 | | | Accounts Receivable | $3,975 | | | Office Supplies | $750 | | | Prepaid Rent | $7,170 | | | Prepaid Insurance | $750 | | | Vehicle (Equipment) | $14,750 | | | Total Assets | $88,365 | | | | | | | Accounts Payable | | $750 | | Wages Payable | $650 | | | Loan Payable | | $25,000 | | Owner's Capital | | $50,000 | | Owner's Withdrawals | $1,000 | | | Service Revenue | | $5,525 | | Rent Expense | $1,195 | | | Advertising Expense | $250 | | | Wages Expense | $325 | | | Telephone Expense | $155 | | | Office Repair Expense | $210 | | | Depreciation Expense | $250 | | | Total Liabilities and Equity | $88,365 | |
Summary:
- The total debits and total credits should equal for the trial balance to be correct.
- In this case, both totals are equal at $88,365.
This unadjusted trial balance provides a snapshot of the company's financial position at the end of June before any adjustments are made for accrued and deferred items.