Question

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, 2016

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash	11,400.00
2	Accounts Receivable	72,600.00
3	Supplies	7,200.00
4	Equipment	112,000.00
5	Accounts Payable		12,200.00
6	Unearned Fees		19,200.00
7	Diana Keck, Capital		137,800.00
8	Diana Keck, Drawing	10,000.00
9	Fees Earned		305,800.00
10	Wages Expense	157,800.00
11	Rent Expense	55,000.00
12	Utilities Expense	42,000.00
13	Miscellaneous Expense	7,000.00
14	Totals	475,000.00	475,000.00

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

a.	Supplies on hand on April 30 were $1,380.
b.	Fees earned but unbilled on April 30 were $3,900.
c.	Depreciation of equipment was estimated to be $3,000 for the year.
d.	Unpaid wages accrued on April 30 were $2,475.
e.	The balance in unearned fees represented the April 1 receipt in advance for services to be provided. Only $14,140 of the services was provided between April 1 and April 30.

	Required:
1.	Journalize the adjusting entries necessary on April 30. Refer to the Chart of Accounts for exact wording of account titles.
2.	Determine the revenues, expenses, and net income of Crazy Mountain Outfitters Co. before the adjusting entries.
3.	Determine the revenues, expense, and net income of Crazy Mountain Outfitters Co. after the adjusting entries.
4.	Determine the effect of the adjusting entries on Diana Keck, Capital.

Chart of Accounts

CHART OF ACCOUNTS
Crazy Mountain Outfitters Co.
General Ledger
ASSETS 11 Cash 12 Accounts Receivable 13 Supplies 16 Equipment 17 Accumulated Depreciation-Equipment LIABILITIES 21 Accounts Payable 22 Wages Payable 23 Unearned Fees EQUITY 31 Diana Keck, Capital 32 Diana Keck, Drawing	REVENUE 41 Fees Earned EXPENSES 51 Wages Expense 52 Rent Expense 53 Supplies Expense 54 Depreciation Expense 56 Utilities Expense 59 Miscellaneous Expense

Journal

1. Journalize the adjusting entries necessary on April 30. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 1

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1		Adjusting Entries
2
3
4
5
6
7
8
9
10
11

Final Questions

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

Before Adjusting Entries

1	Revenues
2	Expenses
3	Net income

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

After Adjusting Entries

1	Revenues
2	Expenses
3	Net income

4. Determine the effect of the adjusting entries on Diana Keck, Capital.

The capital account by

Answer 1

Solution :

Adjusting Journal Entries - Crazy Mountain Outfitters Co
Event	Date	Particulars	Debit	Credit
a.	30-Apr-16	Supplies Expense Dr	$5,820.00
		To Supplies		$5,820.00
		(To record supplies Expense)
b	30-Apr-16	Accounts Receivables Dr	$3,900.00
		To Fees Earned		$3,900.00
		(To record revenue for service performed)
c	30-Apr-16	Depreciation Expense Dr	$3,000.00
		To Accumulated Depreciation - Equipment		$3,000.00
		(To record depreciation expense)
d	30-Apr-16	Wages Expense Dr	$2,475.00
		To Wages Payable		$2,475.00
		(To record wages expense)
e	30-Apr-16	Unearned Fees Dr	$14,140.00
		To Fees Earned		$14,140.00
		(To record fees earned for amount received earlier in advance)

Solution 2:

Revenues before adjusting entries = $305,800

Expenses before adjusting entries = $157,800 + $55,000 + $42,000 + $7,000 = $261,800

Net Income before adjusting entries = $305,800 - $261,800 = $44,000

Solution 3:

Revenues before adjusting entries = $305,800 + $3,900 + $14,140 = $323,840

Expenses before adjusting entries = $157,800 + $55,000 + $42,000 + $7,000 + $5,820 + $3,000 + $2,475 = $273,095

Net Income before adjusting entries = $323,840 - $273,095 = $50,745

Solution 4:

Effect of the adjusting entries on Diana Keck, Capital:

Diana Keck capital will increase by = $50,745 - $44,000 = $6,745