Question

Adjusting Entries

Reliable Repairs and Service, an electronics repair store, prepared the following unadjusted trial balance at the end of its first year of operations:

Reliable Repairs and Service
Unadjusted Trial Balance
April 30, 2018
	Debit Balances		Credit Balances
Cash	13,860
Accounts Receivable	92,000
Supplies	22,170
Equipment	471,750
Accounts Payable			21,610
Unearned Fees			24,380
Common Stock			55,000
Retained Earnings			271,000
Dividends	18,290
Fees Earned			554,200
Wages Expense	128,570
Rent Expense	98,090
Utilities Expense	70,380
Miscellaneous Expense	11,080
	926,190		926,190

For preparing the adjusting entries, the following data were assembled:

Required:

• Fees earned but unbilled on April 30 were $10,030.
• Supplies on hand on April 30 were $8,190.
• Depreciation of equipment was estimated to be $13,860 for the year.
• The balance in unearned fees represented the April 1 receipt in advance for services to be provided. During April $19,260 of the services was provided.
• Unpaid wages accrued on April 30 were $1,770.

1. Journalize the adjusting entries necessary on April 30, 2018.

a.
b.
c.
d.
e.

2. Determine the revenues, expenses, and net income of Reliable Repairs and Service before the adjusting entries.

Revenues	$
Expenses
Net income	$

3. Determine the revenues, expenses, and net income of Reliable Repairs and Service after the adjusting entries.

Revenues	$
Expenses
Net income	$

4. Determine the effect of the adjusting entries on Retained Earnings.
Retained Earnings   by $.

Answer 1

Answer 1

	General Journal
NO.	Date	Account title & explanation	Debit	Credit
a	April 30, 2018	Accounts Receivable	$ 10,030
		Fees Earned		$ 10,030
		To record fees earned but unbilled on April 30 were $10,030.
b	April 30, 2018	Supplies Expense	$ 13,980
		Supplies		$ 13,980
		To record supplies on hand on April 30 were $8,190. (22170-8190)
c	April 30, 2018	Depreciation Expense	$ 13,860
		Accumulated Depreciation		$ 13,860
		To record depreciation of equipment for the year.
d	April 30, 2018	Unearned Fees	$ 19,260
		Fees Earned		$ 19,260
		To adjust the balance of unearned fees.
e	April 30, 2018	Wages Expense	$    1,770
		Wages Payable		$    1,770
		To record accrued wages expense.

Answer 2

Determine the revenues, expenses, and net income of Reliable Repairs and Service before the adjusting entries.
Fees earned (Revenues)	$        554,200
Wages Expense	$        128,570
Rent Expense	$          98,090
Utilities Expense	$          70,380
Miscellaneous Expense	$          11,080
Total Expenses	$        308,120
Revenues	$        554,200
Expenses	$        308,120
Net Income	$        246,080

Answer 3

Reliable Repairs and Service
Worksheet
April 30, 2018
	Unadjusted Trial Balance		Adjustment entries		Adjusted Trial Balance
	Debit	Credit	Debit	Credit	Debit	Credit
Cash	$      13,860				$         13,860
Accounts Receivable	$      92,000		$ 10,030		$       102,030
Supplies	$      22,170			$        13,980	$            8,190
Equipment	$     471,750				$       471,750
Accumulated Depreciation				$        13,860		$         13,860
Accounts Payable		$      21,610				$         21,610
Unearned Fees		$      24,380	$ 19,260			$            5,120
Wages Payable				$          1,770		$            1,770
Common Stock		$      55,000				$         55,000
Retained Earnings		$     271,000				$       271,000
Dividends	$      18,290				$         18,290
Fees Earned		$     554,200		$        29,290		$       583,490
Wages Expense	$     128,570		$    1,770		$       130,340
Supplies Expense			$ 13,980		$         13,980
Depreciation Expense			$ 13,860		$         13,860
Rent Expense	$      98,090				$         98,090
Utilities Expense	$      70,380				$         70,380
Miscellaneous Expense	$      11,080				$         11,080
Total	$     926,190	$     926,190	$ 58,900	$     58,900	$     951,850	$     951,850

Determine the revenues, expenses, and net income of Reliable Repairs and Service after the adjusting entries.
Fees earned (Revenues)	$ 583,490
Wages Expense	$ 130,340
Supplies Expense	$    13,980
Depreciation Expense	$    13,860
Rent Expense	$    98,090
Utilities Expense	$    70,380
Miscellaneous Expense	$    11,080
Total Expenses	$ 337,730
Revenues	$ 583,490
Expenses	$ 337,730
Net Income	$ 245,760

Answer 4

Net Income before adjustment entries	$        246,080
Net Income after adjustment entries	$        245,760
Decrease in net income due to the adjustment.	$                320
Retained Earnings Decreased by $.	$                320