Question

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 $.

Answer 1

Requirement 1:

Date	Account title and explanation	Debit	Credit
Apr. 30	Supplies expense [20230-7470]	$12,760
	Supplies		$12,760
	[To record supplies expense]
Apr. 30	Accounts receivable	$9,150
	Fees earned		$9,150
	[To record accrued revenue]
Apr. 30	Depreciation expense	$12,640
	Accumulated depreciation		$12,640
	[To record depreciation expense]
Apr. 30	Wages expense	$1,620
	Wages payable		$1,620
	[To record accrued wages]
Apr. 30	Unearned fees	$17,580
	Fees earned		$17,580
	[To record revenue earned from unearned]

Requirement 2:

Revenues:
Fees Earned	$505,750
Expenses:
Wages Expense	$117,330
Rent Expense	$89,520
Utilities Expense	$64,230
Miscellaneous Expense	$10,120
Total	$281,200
Net income [505750-281200]	$224,550

Requirement 3:

Revenues:
Fees Earned [505750+9,150+17,580]	$532,480
Expenses:
Wages Expense [117330+1620]	$118,950
Rent Expense	$89,520
Utilities Expense	$64,230
Miscellaneous Expense	$10,120
Supplies expense	$12,760
Depreciation expense	$12,640
Total	$308,220
Net income [532480-308220]	$224,260

Requirement 4:

Retained earnings decreased by $290

Calculations:

Effect of adjusting entries on retained earnings
Increased by Revenues [9150+17580]		$26,730
Decreased by Expenses:
Supplies expense	$12,760
Depreciation expense	$12,640
Wages expense	$1,620
Total expenses		$27,020
Net increase (decrease)		($290)