Question

In: Accounting

Crazy Mountain Outfitters Co., an outfitter store for fishing treks, prepared the following unadjusted trial balance...

  1. Crazy Mountain Outfitters Co., an outfitter store for fishing treks, prepared the following unadjusted trial balance at the end of its first year of operations:

    Crazy Mountain Outfitters Co.
    Unadjusted Trial Balance
    April 30, 20Y5
    Debit
    Balances
    Credit
    Balances
    Cash 12,640
    Accounts Receivable 83,950
    Supplies 20,230
    Equipment 422,010
    Accounts Payable 19,720
    Unearned Fees 22,250
    Common Stock 55,000
    Retained Earnings 234,000
    Dividends 16,690
    Fees Earned 505,750
    Wages Expense 117,330
    Rent Expense 89,520
    Utilities Expense 64,230
    Miscellaneous Expense 10,120
    836,720 836,720

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

    • Supplies on hand on April 30 were $7,470.
    • Fees earned but unbilled on April 30 were $9,150.
    • Depreciation of equipment was estimated to be $12,640 for the year.
    • Unpaid wages accrued on April 30 were $1,620.
    • The balance in unearned fees represented the April 1 receipt in advance for services to be provided. Only $17,580 of the services was provided between April 1 and April 30.

    Required:

    1. Journalize the adjusting entries necessary on April 30, 20Y5. If an amount box does not require an entry, leave it blank.

    Apr. 30
    30
    30
    30
    30

    2. Determine the revenues, expenses, and net income of Crazy Mountain Outfitters Co. before the adjusting entries.

    Revenues $
    Expenses
    Net income $

    3. Determine the revenues, expenses, and net income of Crazy Mountain Outfitters Co. after the adjusting entries.

    Revenues $
    Expenses
    Net income $

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

Solutions

Expert Solution

all amounts are in $

Transactions Journal Entries Dr. ($) Cr. ($)
a supplies expenses 12760
To supplies 12760
b accounts receivable 9150
To fees earned 9150
c depreciation expenses 12640
To accumulated depreciation 12640
d wages expenses 1620
To accrued wages 1620
e unearned fees 17580
To fees earned 17580
Income Statement before adjustments
fees earned 505750
total revenue 505750
less operating expenses
wages expenses 117330
rent expenses 89520
utilities expenses 64230
miscellaneous expenses 10120
total operating expenses 281200
net income 224550
Income Statement after adjustments
fees earned 505750
adjustment b 9150
adjustment e 17580
total revenue 532480
less operating expenses
wages expenses 117330
adjustment d – accrued wages 1620
rent expenses 89520
utilities expenses 64230
miscellaneous expenses 10120
adjustment a – supplies expenses 12760
adjustment c – depreciation expenses 12640
total operating expenses 308220
net income 224260
retained earnings before adjustment after adjustment
beginning balance 234000 234000
net income 224550 224260
less dividend 16690 16690
ending balance 441860 441570

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