C(a) The beginning balance of the supplies account was $245. During the month the company bought additional supplies in the amount of $735. At the end of the month a physical inventory showed $343 of unused supplies.

(b) The company has a 12% note payable in the amount of $17,000 due in 6 months. The interest expense of $170 for the month has not been recorded.

(c) The company has two employees. The manager is paid on the 15th of every month for work performed during the first half of the month and on the 1st of the following month for the work performed during the second half of the month. His monthly salary is $5,500. The other employee is paid $650 for each 5-day work week (Monday - Friday). The last day of the month fell on Thursday.

(d) The unearned fees account shows a balance of $46,000. According to the manager 60% of that amount has been earned.

(e) At the end of the month $5,700 of services had been performed but not yet billed.

Required:

Prepare adjusting entries for the above transactions. Refer to the Chart of Accounts for exact wording of account titles. The journal should have 10 rows.*

Chart of accounts.

CHART OF ACCOUNTS.

General Ledger

ASSETS

11 Cash

12 Accounts Receivable

13 Supplies

14 Prepaid Rent

16 Office Equipment

17 Accumulated Depreciation

LIABILITIES

21 Accounts Payable

22 Notes Payable

23 Unearned Fees

24 Wages and Salary Payable

25 Interest Payable

EQUITY

31 Common Stock

32 Retained Earnings

33 Dividends

REVENUE

41 Fees Earned

EXPENSES

51 Advertising Expense

52 Insurance Expense

53 Interest Expense

54 Wages and Salary Expense

55 Supplies Expense

56 Utilities Expense

57 Depreciation Expense

58 Rent Expense

59 Miscellaneous Expense

Question

C(a)	The beginning balance of the supplies account was $245. During the month the company bought additional supplies in the amount of $735. At the end of the month a physical inventory showed $343 of unused supplies.
(b)	The company has a 12% note payable in the amount of $17,000 due in 6 months. The interest expense of $170 for the month has not been recorded.
(c)	The company has two employees. The manager is paid on the 15th of every month for work performed during the first half of the month and on the 1st of the following month for the work performed during the second half of the month. His monthly salary is $5,500. The other employee is paid $650 for each 5-day work week (Monday - Friday). The last day of the month fell on Thursday.
(d)	The unearned fees account shows a balance of $46,000. According to the manager 60% of that amount has been earned.
(e)	At the end of the month $5,700 of services had been performed but not yet billed.

	Required:
	Prepare adjusting entries for the above transactions. Refer to the Chart of Accounts for exact wording of account titles. The journal should have 10 rows.*

Chart of accounts.

CHART OF ACCOUNTS.

General Ledger

	ASSETS
11	Cash
12	Accounts Receivable
13	Supplies
14	Prepaid Rent
16	Office Equipment
17	Accumulated Depreciation

	LIABILITIES
21	Accounts Payable
22	Notes Payable
23	Unearned Fees
24	Wages and Salary Payable
25	Interest Payable

	EQUITY
31	Common Stock
32	Retained Earnings
33	Dividends

	REVENUE
41	Fees Earned

	EXPENSES
51	Advertising Expense
52	Insurance Expense
53	Interest Expense
54	Wages and Salary Expense
55	Supplies Expense
56	Utilities Expense
57	Depreciation Expense
58	Rent Expense
59	Miscellaneous Expense

	Debit	Credit
Cash	$5,860
Accounts receivable	1,340
Supplies	770
Accounts payable		$450
Unearned service revenue		1,250
Common stock		4,000
Retained earnings		2,270
	$7,970	$7,970

July	1	Purchased equipment, paying $4,000 cash and signing a 2-year note payable for $22,400. The equipment has a 4-year useful life. The note has a 6% interest rate which is payable on the first day of each following month.
	2	Issued 22,400 shares of common stock for $56,000 cash.
	3	Paid $4,200 cash for a 12-month insurance policy effective July 1.
	3	Paid the first 2 (July and August 2017) monthsâ rent for an annual lease of office space for $4,500 per month.
	6	Paid $4,300 for supplies.
	9	Visited client offices and agreed on the terms of a consulting project. Culver will bill the client, Connor Productions, on the 20th of each month for services performed.
	10	Collected $1,340 cash on account from Milani Brothers. This client was billed in June when Culver performed the service.
	13	Performed services for Fitzgerald Enterprises. This client paid $1,250 in advance last month. All services relating to this payment are now completed.
	14	Paid $450 cash for a utility bill. This related to June utilities that were accrued at the end of June.
	16	Met with a new client, Thunder Bay Technologies. Received $13,400 cash in advance for future services to be performed.
	18	Paid semi-monthly salaries for $12,300.
	20	Performed services worth $31,400 on account and billed customers.
	20	Received a bill for $2,500 for advertising services received during July. The amount is not due until August 15.
	23	Performed the first phase of the project for Thunder Bay Technologies. Recognized $11,200 of revenue from the cash advance received July 16.
	27	Received $16,800 cash from customers billed on July 20.

1.		Adjustment of prepaid insurance.
2.		Adjustment of prepaid rent.
3.		Supplies used, $1,400.
4.		Equipment depreciation, $550 per month.
5.		Accrual of interest on note payable.
6.		Salaries for the second half of July, $12,300, to be paid on August 1.
7.		Estimated utilities expense for July, $900 (invoice will be received in August).
8.		Income tax for July, $1,340, will be paid in August

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