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Milbank Repairs & Service Unadjusted Trial Balance June 30, 2019 Debit Balances Credit Balances Cash 14,150...

Milbank Repairs & Service
Unadjusted Trial Balance
June 30, 2019
Debit
Balances Credit
Balances
Cash 14,150
Accounts Receivable 93,980
Supplies 22,650
Equipment 538,900
Accounts Payable 22,080
Unearned Fees 24,910
Nancy Townes, Capital 390,000
Nancy Townes, Drawing 18,680
Fees Earned 566,150
Wages Expense 131,350
Rent Expense 100,210
Utilities Expense 71,900
Miscellaneous Expense 11,320
1,003,140 1,003,140

For preparing the adjusting entries, the following data were assembled:
Fees earned but unbilled on June 30 were $10,240.
Supplies on hand on June 30 were $8,360.
Depreciation of equipment was estimated to be $14,150 for the year.
The balance in unearned fees represented the June 1 receipt in advance for services to be provided. During June $19,680 of the services was provided.
Unpaid wages accrued on June 30 were $1,810.
Required:
1. Journalize the adjusting entries necessary on June 30, 2019.
a.

b.

c.

d.

e.

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
by $.

Solutions

Expert Solution

1.

No. Account Titles and Explanation Debit Credit
a. Accounts receivable 10240
Fees earned 10240
(To record unbilled revenue earned)
b. Supplies expense 14290
Supplies ($22650 - $8360) 14290
(To record supplies expense)
c. Depreciation expense 14150
Accumulated depreciation-equipment 14150
(To record depreciation on equipment)
d. Unearned fees 19680
Fees earned 19680
(To record revenue earned)
e. Wages expense 1810
Wages payable 1810
(To accrue unpaid wages)

2. Revenues: $566150

Expenses: $314780

Net income: $251370

3. Revenues: $596070

Expenses: $345030

Net income: $251040

Workings:

Before adjusting entries After adjusting entries
Revenues:
Fees earned 566150 596070
($566150+$10240+$19680)
Expenses:
Wages expense 131350 133160
($131350+$1810)
Rent expense 100210 100210
Utilities expense 71900 71900
Miscellaneous expense 11320 11320
Supplies expense 0 14290
Depreciation expense 0 14150
Total expense 314780 345030
Net income 251370 251040

4. Nancy Townes, Capital will decrease by $330 ($251370 - $251040) as an effect of the adjusting entries since the net income has decreased from $251370 to $251040.

ekkarill92 answered 2 years ago
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