1. **Problem Statement:** Adjust the unadjusted trial balance of Leah May Santiago Information Systems for the year ended Dec. 31, 2021, by journalizing and posting the adjusting entries based on the additional information provided. 2. **Adjusting Entries Formula and Rules:** Adjusting entries are made to update account balances before preparing financial statements. They typically involve accruals, deferrals, depreciation, and estimates. 3. **Adjusting Entries:** **a. Office Supplies Adjustment:** - Supplies used = Beginning supplies - Ending supplies = 63,000 - 21,000 = 42,000 - Entry: Debit Supplies Expense 42,000; Credit Office Supplies 42,000 **b. Unearned Revenues Adjustment:** - One-third earned = (1/3) × Unearned Revenues - Unearned Revenues amount is not given explicitly; assume it is part of Consulting Revenues or a separate account (not listed). Since not listed, no entry unless specified. **c. Depreciation:** - Building Depreciation = 38,000 - Equipment Depreciation = 123,000 - Entry: Debit Depreciation Expense-Building 38,000; Credit Accumulated Depreciation-Building 38,000 - Entry: Debit Depreciation Expense-Equipment 123,000; Credit Accumulated Depreciation-Equipment 123,000 **d. Accrued Salaries:** - Salaries accrued = 14,000 - Entry: Debit Salaries Expense 14,000; Credit Salaries Payable 14,000 **e. Interest on Notes Receivable:** - Notes receivable issued Sept 1, 2021, interest 20% annual, interest accrued for 4 months (Sept-Dec) - Interest = Principal × Rate × Time = 360,000 × 0.20 × (4/12) = 24,000 - Entry: Debit Interest Receivable 24,000; Credit Interest Revenue 24,000 4. **Summary of Adjusting Journal Entries:** | Date | Account Titles and Explanation | Debit | Credit | |-------|-------------------------------|-------|--------| | Dec 31 | Supplies Expense | 42,000 | | | | Office Supplies | | 42,000 | | Dec 31 | Depreciation Expense-Building | 38,000 | | | | Accumulated Depreciation-Building | | 38,000 | | Dec 31 | Depreciation Expense-Equipment | 123,000 | | | | Accumulated Depreciation-Equipment | | 123,000 | | Dec 31 | Salaries Expense | 14,000 | | | | Salaries Payable | | 14,000 | | Dec 31 | Interest Receivable | 24,000 | | | | Interest Revenue | | 24,000 | 5. **Posting to Ledger Accounts:** - Each adjusting entry is posted to the respective ledger accounts, updating their balances. 6. **Note:** - Unearned revenues adjustment cannot be made due to missing unearned revenue account balance. This completes the adjusting entries and posting process for the given data.