In: Accounting
Milbank Repairs & Service, an electronics repair store, prepared the following unadjusted trial balance at the end of its first year of operations:
Milbank Repairs & Service | ||||
Unadjusted Trial Balance | ||||
June 30, 2019 | ||||
Debit Balances |
Credit Balances |
|||
Cash | 12,410 | |||
Accounts Receivable | 82,420 | |||
Supplies | 19,860 | |||
Equipment | 472,590 | |||
Accounts Payable | 19,360 | |||
Unearned Fees | 21,850 | |||
Nancy Townes, Capital | 342,000 | |||
Nancy Townes, Drawing | 16,380 | |||
Fees Earned | 496,510 | |||
Wages Expense | 115,190 | |||
Rent Expense | 87,880 | |||
Utilities Expense | 63,060 | |||
Miscellaneous Expense | 9,930 | |||
879,720 | 879,720 |
For preparing the adjusting entries, the following data were assembled:
Required:
1. Journalize the adjusting entries necessary on June 30, 2019.
a. | Accounts Receivable | ||
Fees Earned | |||
b. | Supplies Expense | ||
Supplies | |||
c. | |||
d. | |||
e. | |||
Feedback
1. Keep in mind that you will be making an adjusting entry for each of these that affects at least one income statement account (revenue or expense) and one balance sheet account (asset or liability). As you go through each of these, consider both sides of the transaction that results in an adjusting entry and identify related accounts. Remember, four different categories of adjusting entries include prepaid expenses (deferred expenses), unearned revenues (deferred revenues), accrued expenses (accrued liabilities), and accrued revenues (accrued assets) plus the adjustment for depreciation expense.
2. Determine the revenues, expenses, and net income of Milbank Repairs & Service before the adjusting entries.
Revenues | $ |
Expenses | |
Net income | $ |
3. Determine the revenues, expenses, and net income of Milbank Repairs & Service after the adjusting entries.
Revenues | $ |
Expenses | |
Net income | $ |
4. Determine the effect of the adjusting
entries on Nancy Townes, Capital.
Nancy Townes, Capital decreases by $.
Solution 1:
Adjusting Journal Entries | |||
Date | Particulars | Debit | Credit |
(a) | Accounts Receivable Dr | $8,980 | |
To Fees earned | $8,980 | ||
(To record fees earned) | |||
(b) | Supplies expense Dr ($19860-7330) | $12,530 | |
To Supplies | $12,530 | ||
(To record supplies expense) | |||
(c ) | Depreciation expense Dr | $12,410 | |
To Accumulated Depreciation | $12,410 | ||
(To record Depreciation expense on Equipment) | |||
(d) | Unearned Fees Dr | $17,260 | |
To Fees Earned | $17,260 | ||
(To record fees earned) | |||
(e) | Wages expense Dr | $1,590 | |
To Wages Payable | $1,590 | ||
(To record Wages expense payable) |
Solution 2:
Before the adjusting entries | |
Revenues | $4,96,510 |
Expenses (115190+87880+63060+9930) | $2,76,060 |
Net Income | $2,20,450 |
Solution 3:
After the adjusting entries | |
Revenues (496510+8980+17260) | $5,22,750 |
Expenses ($276060+12530+12410+1590) | $3,02,590 |
Net Income | $2,20,160 |
Solution 4:
Nancy Townes, Capital decreases by = $220450 - $220160 = $290