AFM101 Chapter Notes - Chapter 4: Deferral, Financial Statement, Retained Earnings
AFM101 Full Course Notes
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Hart Corporation encounters the following situations:
Identify what type of adjusting entry (prepaid expense, unearnedrevenue, accrued expense, or accrued revenue) is needed in eachsituation at December 31, 2015.
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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 | |
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1 | Adjusting Entries | ||||
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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