Question
After posting its adjusting entries, Wexford Consulting shows the following account balances at December 31, 2025. All accounts carry their normal balances.
| Account | Balance |
|---|
| Cash | $20,000 |
| Accounts Receivable | 15,000 |
| Prepaid Rent | 3,000 |
| Equipment | 55,000 |
| Accumulated Depreciation - Equipment | 10,000 |
| Accounts Payable | 8,000 |
| Salaries and Wages Payable | 3,000 |
| Unearned Revenue | 2,000 |
| Share Capital - Ordinary | 60,000 |
| Retained Earnings | 12,000 |
| Service Revenue | 56,000 |
| Salaries and Wages Expense | 42,000 |
| Rent Expense | 9,000 |
| Depreciation Expense | 5,000 |
| Insurance Expense | 2,000 |
Required: Prepare the adjusted trial balance at December 31, 2025 and prove that total debits equal total credits.
Scoring
- 40% Account naming / line matching
- 40% Amount correctness
- 20% Structure / section placement
IAS 1 — Presentation of Financial Statements
Work the cycle in its fixed order: journalise, post to the ledger, extract an unadjusted trial balance, pass adjusting entries, extract an adjusted trial balance, prepare the statements, then close the temporary accounts. Each step consumes the output of the one before it, so an error early on propagates all the way to the closing entries rather than staying local.
Common mistakes
- Preparing the financial statements from the unadjusted trial balance instead of the adjusted one.
- Closing permanent accounts — assets, liabilities and capital carry forward; only revenue, expense and drawings/dividends close.
- Forgetting that the post-closing trial balance should contain no income statement accounts at all.
Further readingIAS 1: what goes where in a full set of statements