MGAB01H3 Lecture Notes - Lecture 4: E-Book, European Route E411
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Reliable Repairs & Service, an electronics repair store, prepared the following unadjusted trial balance at the end of its first year of operations:
Reliable Repairs & Service
UNADJUSTED TRIAL BALANCE
April 30, 2016
ACCOUNT TITLE | DEBIT | CREDIT | |
---|---|---|---|
1 | Cash | 10,350.00 | |
2 | Accounts Receivable | 67,500.00 | |
3 | Supplies | 16,200.00 | |
4 | Equipment | 116,100.00 | |
5 | Accounts Payable | 15,750.00 | |
6 | Unearned Fees | 18,000.00 | |
7 | Karin Bickle, Capital | 121,500.00 | |
8 | Karin Bickle, Drawing | 13,500.00 | |
9 | Fees Earned | 294,750.00 | |
10 | Wages Expense | 94,500.00 | |
11 | Rent Expense | 72,000.00 | |
12 | Utilities Expense | 51,750.00 | |
13 | Miscellaneous Expense | 8,100.00 | |
14 | Totals | 450,000.00 | 450,000.00 |
For preparing the adjusting entries, the following data were assembled:
a. | Fees earned but unbilled on April 30 were $9,850. |
b. | Supplies on hand on April 30 were $4,660. |
c. | Depreciation of equipment was estimated to be $6,470 for the year. |
d. | The balance in unearned fees represented the April 1 receipt in advance for services to be provided. During April, $15,000 of the services were provided. |
e. | Unpaid Wages accrued on April 30 were $5,200. |
Required: | |
1. | Journalize the adjusting entries necessary on April 30, 2016. Refer to the Chart of Accounts for exact wording of account titles. |
2. | Determine the revenues, expenses, and net income of Reliable Service & Repairs before the adjusting entries. |
3. | Determine the revenues, expenses, and net income of Reliable Service & Repairs after the adjusting entries. |
4. | Determine the effect of the adjusting entries on Karin Bickle, Capital. |
Chart of Accounts
CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||
Reliable Repairs & Service | |||||||||||||||||||||||||||||||||||||||||||||
General Ledger | |||||||||||||||||||||||||||||||||||||||||||||
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Journal
1. Journalize the adjusting entries necessary on April 30, 2016. Refer to the Chart of Accounts for exact wording of account titles.
PAGE 10
JOURNAL
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | |
---|---|---|---|---|---|
1 | Adjusting Entries | ||||
2 | |||||
3 | |||||
4 | |||||
5 | |||||
6 | |||||
7 | |||||
8 | |||||
9 | |||||
10 | |||||
11 |
Final Questions
2. Determine the revenues, expenses, and net income of Reliable Service & Repairs before the adjusting entries.
Before Adjusting Entries |
1 | Revenues | |
2 | Expenses | |
3 | Net income |
3. Determine the revenues, expenses, and net income of Reliable Service & Repairs after the adjusting entries.
After Adjusting Entries |
1 | Revenues | |
2 | Expenses | |
3 | Net income |
4. Determine the effect of the adjusting entries on Karin Bickle, Capital.
The capital account by
Alison and Chuck Renny began operations of their furniture repair shop (Lazy Sofa Furniture, Inc.) on January 1, 2014. The annual reporting period ends December 31. The trial balance on January 1, 2015, appears below (amounts are rounded to thousands of dollars to simplify). |
Account Titles | Debit | Credit | ||||
Cash | $ | 5 | ||||
Accounts Receivable | 4 | |||||
Supplies | 1 | |||||
Equipment | 6 | |||||
Accumulated Depreciation | $ | 0 | ||||
Software | 12 | |||||
Accumulated Amortization | 5 | |||||
Accounts Payable | 7 | |||||
Notes Payable (long-term) | 0 | |||||
Salaries and Wages Payable | 0 | |||||
Interest Payable | 0 | |||||
Income Tax Payable | 0 | |||||
Unearned Revenue | 0 | |||||
Common Stock | 12 | |||||
Retained Earnings | 4 | |||||
Service Revenue | 0 | |||||
Supplies Expense | 0 | |||||
Depreciation Expense | 0 | |||||
Salaries and Wages Expense | 0 | |||||
Amortization Expense | 0 | |||||
Interest Expense | 0 | |||||
Income Tax Expense | 0 | |||||
Totals | $ | 28 | $ | 28 | ||
Transactions during 2015 (summarized in thousands of dollars) follow: | |
1. | Borrowed $26 cash on July 1, 2015, signing a six-month note payable. |
2. | Purchased equipment for $23 cash on July 1, 2015. |
3. | Issued additional shares of common stock for $6. |
4. | Earned revenues for 2015 in the amount of $68, including $7 on credit and $61 received in cash. |
5. | Recognized salaries and wages expenses for 2015 of $40, paid in cash. |
6. | Purchased additional equipment, $2 cash. |
7. | Collected accounts receivable, $9. |
8. | Paid accounts payable, $12. |
9. | Purchased on account supplies for future use, $8. |
10. | Received a $5 cash deposit on work to start January 15, 2016. |
Data for adjusting journal entries: | |
11. | Amortization for 2015, $5. |
12. | Supplies of $6 were counted on December 31, 2015. |
13. | Depreciation for 2015, $3. |
14. | Accrued interest on notes payable of $1. |
15. | Wages earned since the December 24 payroll not yet paid, $4. |
. | 16.Income tax for 2015 was $2 and will be paid in 2016. Q1 Record journal entries for transactions (1) through (10) Q2Set up T-accounts for the accounts on the trial balance. Enter beginning balances and post the transactions 1-10, adjusting entries 11-16, and closing entry Q3Post the journal entries from requirement 2 to T-accounts and prepare an unadjusted trial balance Q4Record the adjusting journal entries (11) through (16) Q5Post the adjusting entries from requirement 4 and prepare an adjusted trial balance Q6Prepare an income statement. and Prepare statement of retained earnings and Prepare balance sheet Q7Prepare the closing journal entry. Q8Post the closing entry from requirement 7 and prepare a post-closing trial balance |