Question
The following account balances were extracted from the ledger of Riverton Consulting Group as at 30 September 2025:
- Cash: $60,000
- Accounts Receivable: $22,000
- Prepaid Rent: $6,000
- Prepaid Insurance: $2,400
- Supplies: $3,500
- Equipment: $45,000
- Accumulated Depreciation: $15,000
- Accounts Payable: $9,800
- Salaries Payable: $4,200
- Unearned Revenue: $12,000
- Owner Capital: $40,000
- Owner Drawings: $10,000
- Service Revenue: $145,000
- Salaries Expense: $52,000
- Rent Expense: $9,000
- Utilities Expense: $4,100
- Supplies Expense: $2,800
- Depreciation Expense: $6,000)
- Subscription Software Expense: $3,200
Required: Prepare the trial balance as at 30 September 2025, placing each account in the correct column with the correct amount.
Scoring
- 40% Account naming / line matching
- 40% Amount correctness
- 20% Structure / section placement
IAS 1 — accrual basis of accounting
Adjusting entries exist to move revenue and expense into the period they belong to, regardless of when cash moved. Every adjusting entry touches at least one income statement account and one balance sheet account — and never the cash account, because the cash has either already moved or has not moved yet.
Common mistakes
- Debiting or crediting Cash in an adjusting entry — a reliable sign the entry is wrong.
- Adjusting for the full amount of a prepayment rather than only the expired portion.
- Missing accrued items entirely because no document prompted them — accrued interest and accrued wages are the usual casualties.
Further readingThe 5 types of adjusting entry