(Learning Objective 3, 4, 6: Preparing an adjusted trial balance and the financial statements; using the current ratio to evaluate the business) Consider the unadjusted trial balance of Omega Advertising, Inc., at October 31, 20X2, and the related month-end adjustment data.
Omega Advertising, Inc. Trial Balance October 31, 20X2
Retained earnings (September 30, 20X2)
a. Accrued advertising revenue at October 31, $2,900.
b. Prepaid rent expired during the month. The unadjusted prepaid balance of $4,000 relates to the period October 20X2 through January 20X3.
c. Supplies used during October, $200.
d. Depreciation on furniture for the month. The furniture’s expected useful life is 5 years.
e. Accrued salary expense at October 31 for Monday through Thursday; the 5-day weekly payroll is $2,000.
1. Using Exhibit 3-9, page 145, as an example, prepare the adjusted trial balance of Omega Advertising at October 31, 20X2. Key each adjusting entry by letter.
2. Prepare the monthly income statement, the statement of retained earnings, and the classified balance sheet. Draw arrows linking the three financial statements.