ock Bottom Harbor Clothing Cor

Rock Bottom Harbor Clothing Corporation
Trial Balance
December 31, 2018
    Debit   Credit    
Cash   $    22,500        
Accounts Receivable          17,350        
Allowance for Doubtful Accounts       $          600    
Inventory, December 31          70,350        
Prepaid Insurance             5,200        
Prepaid Rent          15,000        
Equipment          60,000        
Accumulated Depreciation- Eqpuipment              22,500    
Accounts Payable              17,000    
Notes Payable              25,000    
Common Stock              10,000    
Retained Earnings              92,450    
Sales Revenue            397,300    
Cost of Goods Sold        207,400        
Salaries Expense (sales)          59,850        
Advertising Expense          26,700        
Salaries Expense (administration)          76,300        
Supplies Expense             4,200        
   Total   $ 564,850   $ 564,850    


Above is the unadjusted trial balance for Rock Bottom Harbor Clothing Corporation. They close their books of Dec 31st

  1. Equipment is depreciated based on a 8-year life. The equipment has no salvage value. It was purchased on January 1, 2015.
  2. The bad debt expense is estimated to be $1,450. They use the percentage of sales method allowed by GAAP.
  3. The insurance was prepaid on January 1, 2018. It covers the period from January 1, 2018 thru December 31, 2019.
  4. The sales team worked the last week in December, but will not be paid until January 5th. They earned $2,750 for the 5 days of work.
  5. The note payable is due next July (short term). The interest that has accrued on the loan is $1,850, but has not been paid or recorded as of December 21, 2018.
  6. Advertising was paid in advance on November 1, 2018. The amount was $1,100. The company plans to do a large spread, magazine advertisement on January 15, 2019.
  7. Office supplies on hand totaled $900. That same inexperienced staff accountant had charged the full $4,200 to expense even though all of the supplies had not been used at December 31.
  8. After an inventory count at year end, the staff accountant noted that the inventory market value was lower than what was on the books (cost). Market value is $68,250 on December 31.
  9. The rent was paid in advance, for the full year, on January 1, 2018.

Prepare an adjusted trial balance at December 31, 2018. Note that the following additional accounts will be needed.

Bad Debt Expense, Insurance Expense, Interest Expense, Prepaid Advertising, Supplies, Rent Expense

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