Question

At the end of April, the first month of operations, the following selected data were taken from the financial statements of Shelby Crawford, an attorney:

Net income for April	$120,000
Total assets at April 30	750,000
Total liabilities at April 30	300,000
Total owner’s equity at April 30	450,000

In preparing the financial statements, adjustments for the following data were overlooked:

•	Supplies used during April, $2,750.
•	Unbilled fees earned at April 30, $23,700.
•	Depreciation of equipment for April, $1,800.
•	Accrued wages at April 30, $1,400.

CHART OF ACCOUNTS
Shelby Crawford
General Ledger
ASSETS 11 Cash 12 Accounts Receivable 13 Prepaid Insurance 14 Supplies 15 Land 16 Equipment 17 Accumulated Depreciation-Equipment LIABILITIES 21 Accounts Payable 22 Unearned Rent 23 Wages Payable EQUITY 31 Common Stock 32 Retained Earnings 33 Dividends	REVENUE 41 Fees Earned 42 Rent Revenue EXPENSES 51 Wages Expense 52 Utilities Expense 53 Advertising Expense 54 Repairs Expense 56 Depreciation Expense 57 Insurance Expense 58 Supplies Expense 59 Miscellaneous Expense

1. Journalize the entries on April 30 to record the omitted adjustments. Refer to the Chart of Accounts for exact wording of account titles.

How does grading work?

PAGE 10

JOURNAL

ACCOUNTING EQUATION

Score: 101/101

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1		Adjusting Entries
2	?	?		?
3		?			?
4	?	?		?
5		?			?
6	?	?		?
7		?			?
8	?	?		?
9		?			?

2. Determine the correct amount of net income for April and the total assets, liabilities, and owner’s equity at April 30. In addition to indicating the corrected amounts, indicate the effect of each omitted adjustment using the columnar table provided. Adjustment (a) is presented as an example. (Note: Use a minus sign (-) to indicate a decrease. If there is no amount or an amount is zero, enter "0".)

Score: 39/64

Corrected Amounts

1		Net Income	Total Assets =	Total Liabilities +	Total Owner’s Equity
2	Reported amounts	$120,000.00	$750,000.00	$300,000.00	$450,000.00
3	Corrections:
4	Supplies used	(2,750.00)	(2,750.00)	0.00	(2,750.00)
5	Unbilled fees earned	?	?
6	Equipment depreciation	?	?
7	Accrued wages	?		?
8	Corrected amounts	?	?	?

Answer 1

• All working forms part of the answer
• Requirement 1, as asked

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1		Adjusting Entries
2	30-Apr	Supplies expense		$              2,750.00				$          (2,750.00)
3		Supplies			$                   2,750.00	$          (2,750.00)
4	30-Apr	Accounts receivables		$            23,700.00		$          23,700.00
5		Fees Earned			$                 23,700.00			$          23,700.00
6	30-Apr	Depreciation expense		$              1,800.00				$          (1,800.00)
7		Accumulated Depreciation Equipment			$                   1,800.00	$          (1,800.00)
8	30-Apr	Wages Expense		$              1,400.00				$          (1,400.00)
9		Wages payable			$                   1,400.00		$             1,400.00

• Requirement 2

Corrected Amounts
1		Net Income	Total Assets =	Total Liabilities +	Total Owner’s Equity
2	Reported amounts	$                 1,20,000.00	$        7,50,000.00	$             3,00,000.00	$       4,50,000.00
3	Corrections:
4	Supplies used	$                     (2,750.00)	$            (2,750.00)	$                                -	$          (2,750.00)
5	Unbilled fees earned	$                     23,700.00	$            23,700.00	$                                -	$          23,700.00
6	Equipment depreciation	$                     (1,800.00)	$            (1,800.00)	$                                -	$          (1,800.00)
7	Accrued wages	$                     (1,400.00)	$                           -	$                   1,400.00	$          (1,400.00)
8	Corrected amounts	$                 1,37,750.00	$        7,69,150.00	$             3,01,400.00	$       4,67,750.00