Question

In: Accounting

Selected account balances before adjustment for Alantic Coast Realty at July 31, 2016, the end of...

Selected account balances before adjustment for Alantic Coast Realty at July 31, 2016, the end of the current year, are as follows:

Debits

Credits

Accounts Receivable $73,600
Equipment 346,600
Accumulated Depreciation—Equipment $107,000
Prepaid Rent 8,550
Supplies 3,090
Wages Payable
Unearned Fees 11,000
Fees Earned 672,400
Wages Expense 337,500
Rent Expense
Depreciation Expense
Supplies Expense

Data needed for year-end adjustments are as follows:

a. Unbilled fees at July 31, $10,250.
b. Supplies on hand at July 31, $710.
c. Rent expired, $5,700.
d. Depreciation

The systematic periodic transfer of the cost of a fixed asset to an expense account during its expected useful life.

of equipment during year, $9,500.
e. Unearned fees at July 31, $2,340.
f. Wages accrued but not paid at July 31, $4,700.
Required:
1. Journalize the six adjusting entries required at July 31, based on the data presented. Refer to the Chart of Accounts for exact wording of account titles.
2. What would be the effect on the income statement if adjustments (a) and (f) were omitted at the end of the year?
3. What would be the effect on the balance sheet if adjustments (a) and (f) were omitted at the end of the year?
4. What would be the effect on the “Net increase or decrease in cash” on the statement of cash flows if adjustments (a) and (f) were omitted at the end of the year?

none

X

Chart of Accounts

CHART OF ACCOUNTS
Alantic Coast Realty
General Ledger
ASSETS
11 Cash
12 Accounts Receivable
13 Supplies
14 Prepaid Rent
15 Land
16 Equipment
17 Accumulated Depreciation-Office Equipment
19 Accumulated Depreciation-Automobiles
LIABILITIES
21 Accounts Payable
22 Unearned Fees
23 Wages Payable
24 Taxes Payable
EQUITY
31 Owner, Capital
32 Owner, Drawing
REVENUE
41 Fees Earned
42 Rent Revenue
EXPENSES
51 Advertising Expense
52 Insurance Expense
53 Rent Expense
54 Wages Expense
55 Supplies Expense
56 Utilities Expense
57 Depreciation Expense
59 Miscellaneous Expense

none

X

Journal

1. Journalize the six adjusting entries required at July 31, based on the data presented. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

DATE DESCRIPTION POST. REF. DEBIT CREDIT

1

Adjusting Entries

2

3

4

5

6

7

8

9

10

11

12

13

Solution

DATE DESCRIPTION POST. REF. DEBIT CREDIT

1

Adjusting Entries

2

3

4

5

6

7

8

9

10

11

12

13

Points:

Feedback

Check My Work

Explanation

none

X

Final Questions

2. What would be the effect on the income statement if adjustments (a) and (f) were omitted at the end of the year?

Over/Understated

Amount

Fees earned selector 1

Understated

Overstated

No effect

Wages expense selector 2

Understated

Overstated

No effect

Net income selector 3

Understated

Overstated

No effect

Points:

Feedback

Check My Work

Explanation

3. What would be the effect on the balance sheet if adjustments (a) and (f) were omitted at the end of the year?

Over/Understated

Amount

Accounts receivable selector 1

Understated

Overstated

No effect

Total assets selector 2

Understated

Overstated

No effect

Wages payable selector 3

Understated

Overstated

No effect

Total liabilities selector 4

Understated

Overstated

No effect

Owner’s capital selector 5

Understated

Overstated

No effect

Total liabilities and owner’s equity selector 6

Understated

Overstated

No effect

Points:

Feedback

Check My Work

Explanation

4. What would be the effect on the “Net increase or decrease in cash” on the statement of cash flows if adjustments (a) and (f) were omitted at the end of the year? selector 1

Understated

Overstated

No effect

Points:

Feedback

Check My Work

Explanation

Solutions

Expert Solution

1 Date Description Debit Credit
a. Jul. 31 Accounts receivable 10250
Fees earned 10250
(To record unbilled fees)
b. Jul. 31 Supplies expense ($3090 - $710) 2380
Supplies 2380
(To record supplies expense)
c. Jul. 31 Rent expense 5700
Prepaid rent 5700
(To record rent expired)
d. Jul. 31 Depreciation expense 9500
Accumulated depreciation-office equipment 9500
(To record depreciation expense)
e. Jul. 31 Unearned fees 8660
Fees earned ($11000 - $2340) 8660
(To record fees earned)
f. Jul. 31 Wages expense 4700
Wages payable 4700
(To record accrued wages)

2.

Over/Understated Amount
Fees earned Understated $10250
Wages expense Understated $4700
Net income ($10250 - $4700) Understated $5550

3.

Over/Understated Amount
Accounts receivable Understated $10250
Total assets Understated $10250
Wages payable Understated $4700
Total liabilities Understated $4700
Owner's capital Understated $5550
Total liabilities and owner's equity Understated $10250

4. No effect.

Since no cash is involved.


Related Solutions

Selected account balances before adjustment for Alantic Coast Realty at July 31, 2016, the end of...
Selected account balances before adjustment for Alantic Coast Realty at July 31, 2016, the end of the current year, are as follows: Debits Credits Accounts Receivable $ 75,000 Equipment 345,700 Accumulated Depreciation—Equipment $112,500 Prepaid Rent 9,000 Supplies 3,350 Wages Payable – Unearned Fees 12,000 Fees Earned 660,000 Wages Expense 325,000 Rent Expense – Depreciation Expense – Supplies Expense – Data needed for year-end adjustments are as follows: a. Unbilled fees at July 31, $11,150. b. Supplies on hand at July...
Selected account balances before adjustment for Alantic Coast Realty at July 31, 2016, the end of...
Selected account balances before adjustment for Alantic Coast Realty at July 31, 2016, the end of the current year, are as follows: Debits Credits (debits) Accounts Receivable $ 75,000 (debits) Equipment 345,700 (credit) Accumulated Depreciation—Equipment $112,500 (debits) Prepaid Rent 9,000 (debits) Supplies 3,350 (credit) Wages Payable – (credit) Unearned Fees 12,000 (credit) Fees Earned 660,000 (debits) Wages Expense 325,000 Rent Expense – Depreciation Expense – Supplies Expense – Data needed for year-end adjustments are as follows: a. Unbilled fees at...
Selected account balances before adjustment for Alantic Coast Realty at July 31, 2016, the end of...
Selected account balances before adjustment for Alantic Coast Realty at July 31, 2016, the end of the current year, are as follows: Debits Credits Accounts Receivable $ 75,000 Equipment 345,700 Accumulated Depreciation—Equipment $112,500 Prepaid Rent 9,000 Supplies 3,350 Wages Payable – Unearned Fees 12,000 Fees Earned 660,000 Wages Expense 325,000 Rent Expense – Depreciation Expense – Supplies Expense – Data needed for year-end adjustments are as follows: a. Unbilled fees at July 31, $11,150. b. Supplies on hand at July...
Selected account balances before adjustment for Intuit Realty at November 30, the end of the current...
Selected account balances before adjustment for Intuit Realty at November 30, the end of the current year, follow: Debits Credits Accounts Receivable $ 75,000 Equipment 250,000 Accumulated Depreciation-Equipment $12,000 Prepaid Rent 12,000 Supplies 3,170 Wages Payable – Unearned Fees 10,000 Fees Earned 400,000 Wages Expense 140,000 Rent Expense – Depreciation Expense – Supplies Expense – Data needed for year-end adjustments are as follows: a. Supplies on hand at November 30, $550. b. Depreciation The systematic periodic transfer of the cost...
Adjusting Entries Selected account balances before adjustment for Intuit Realty at November 30, the end of...
Adjusting Entries Selected account balances before adjustment for Intuit Realty at November 30, the end of the current year, follow: Debits Credits Accounts Receivable $76,750 Equipment 118,000 Accumulated Depreciation - Equipment $11,820 Prepaid Rent 9,700 Supplies 2,300 Wages Payable _ Unearned Fees 10,590 Fees Earned 448,220 Wages Expense 151,200 Rent Expense _ Depreciation Expense _ Supplies Expense _ Data needed for year-end adjustments are as follows: Supplies on hand at November 30, $690. Depreciation of equipment during year, $1,150. Rent...
Adjusting Entries Selected account balances before adjustment for Intuit Realty at November 30, the end of...
Adjusting Entries Selected account balances before adjustment for Intuit Realty at November 30, the end of the current year, follow: Debits Credits Accounts Receivable $52,000 Equipment 80,000 Accumulated Depreciation - Equipment $8,010 Prepaid Rent 6,600 Supplies 1,560 Wages Payable _ Unearned Fees 7,180 Fees Earned 303,680 Wages Expense 102,440 Rent Expense _ Depreciation Expense _ Supplies Expense _ Data needed for year-end adjustments are as follows: Required: Supplies on hand at November 30, $470. Depreciation of equipment during year, $780....
The balance in the prepaid insurance account, before adjustment at the end of the year, is...
The balance in the prepaid insurance account, before adjustment at the end of the year, is $27,000. Journalize the adjusting entry required under each of the following alternatives for determining the amount of the adjustment: a. The amount of insurance expired during the year is $20,250. * Insurance expense = $20,250 * Prepaid Insurance = ? b. The amount of unexpired insurance applicable to future periods is $6,750. * Insurance expense = ? * Prepaid Insurance = $20,250
Problem Set A Copeland Company had the following account balances at December 31, 2016, before recording...
Problem Set A Copeland Company had the following account balances at December 31, 2016, before recording bad debt expense for the year: Unadjusted Trial Balance Accounts receivable $1,400,000 Allowance for uncollectible accounts (credit balance) 22,000 Credit sales for 2016 1,950,000 Ending 12/31/2015 Balance in Accounts receivable on 1/1/2016 $1,200,000 Balance in Allowance for uncollectible accounts (credit balance) on 1/1/2016             24,000 Copeland is considering the following approaches for estimating bad debts for 2016: Option A: Based on 3% of credit...
Problem Set A Copeland Company had the following account balances at December 31, 2016, before recording...
Problem Set A Copeland Company had the following account balances at December 31, 2016, before recording bad debt expense for the year: Unadjusted Trial Balance Accounts receivable $1,400,000 Allowance for uncollectible accounts (credit balance) 22,000 Credit sales for 2016 1,950,000 Ending 12/31/2015 Balance in Accounts receivable on 1/1/2016 $1,200,000 Balance in Allowance for uncollectible accounts (credit balance) on 1/1/2016 24,000 Copeland is considering the following approaches for estimating bad debts for 2016: Option A: Based on 3% of credit sales...
The following are partial income statement account balances taken from the December 31, 2016, year-end trial...
The following are partial income statement account balances taken from the December 31, 2016, year-end trial balance of White and Sons, Inc.: restructuring costs, $420,000; interest revenue, $52,000; before-tax loss on discontinued operations, $520,000; and loss on sale of investments, $62,000. Income tax expense has not yet been recorded. The income tax rate is 40%. Prepare the lower portion of the 2016 income statement beginning with $910,000 income from continuing operations before income taxes. Include appropriate basic EPS disclosures. The...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT