Question
Prepare an adjusted trial balance using these balances, all on their normal sides:
| Account | Balance ($) |
|---|---|
| Accounts Payable | 18,000 |
| Accounts Receivable | 4,000 |
| Investments | 88,000 |
| Cash | 19,000 |
| Common Stock | 30,000 |
| Dividends | 16,000 |
| Prepaid Insurance | 20,000 |
| Insurance Expense | 8,000 |
| Land | 26,000 |
| Notes Payable (long term) | 55,000 |
| Salaries Expense | 37,000 |
| Sales Revenue | 115,000 |
At period end, investments have earned 2,200 dollars of unrecorded interest; 12,000 dollars of the insurance remains unexpired.
Answer
The adjusted trial balance totals $220,200 on each side after recording accrued interest and the expired portion of insurance.
Record the adjustments
| Adjusting entry | Debit ($) | Credit ($) |
|---|---|---|
| Interest Receivable | 2,200 | — |
| Interest Revenue | — | 2,200 |
| Insurance Expense | 8,000 | — |
| Prepaid Insurance | — | 8,000 |
Interest earned but not yet recorded creates a receivable and revenue; it does not increase Cash. Expired insurance is 20,000 − 12,000 = 8,000. Add that expense to the existing 8,000 expense balance, giving 16,000, and reduce prepaid insurance to 12,000.
Adjusted trial balance
| Account | Debit ($) | Credit ($) |
|---|---|---|
| Cash | 19,000 | — |
| Accounts Receivable | 4,000 | — |
| Interest Receivable | 2,200 | — |
| Investments | 88,000 | — |
| Prepaid Insurance | 12,000 | — |
| Land | 26,000 | — |
| Accounts Payable | — | 18,000 |
| Notes Payable (long term) | — | 55,000 |
| Common Stock | — | 30,000 |
| Dividends | 16,000 | — |
| Sales Revenue | — | 115,000 |
| Interest Revenue | — | 2,200 |
| Insurance Expense | 16,000 | — |
| Salaries Expense | 37,000 | — |
| Total | 220,200 | 220,200 |
Cross-check
Before adjustment, each side totals 218,000. The interest entry adds 2,200 to each side. The insurance entry moves 8,000 between two debit-balance accounts, leaving total debits unchanged. Thus 218,000 + 2,200 = 220,200.
Equal columns verify arithmetic balance, but do not prove that every transaction was recorded in the correct account or period.
Evidence boundary
This solution uses OpenStax Chapter 4, Problem Set B, PB16, with normal account balances and only the two stated adjustments. The $12,000 insurance amount is the remaining prepaid asset, not an additional expense. No missing retained earnings, cash collection, or closing entries are invented.
Sources
These references support the concepts and methods used in the explanation above.