Question

Reliable Repairs & Service, an electronics repair store, prepared the following unadjusted trial balance at the end of its first year of operations:

Reliable Repairs & Service

UNADJUSTED TRIAL BALANCE

April 30, 2016

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash	10,350.00
2	Accounts Receivable	67,500.00
3	Supplies	16,200.00
4	Equipment	116,100.00
5	Accounts Payable		15,750.00
6	Unearned Fees		18,000.00
7	Karin Bickle, Capital		121,500.00
8	Karin Bickle, Drawing	13,500.00
9	Fees Earned		294,750.00
10	Wages Expense	94,500.00
11	Rent Expense	72,000.00
12	Utilities Expense	51,750.00
13	Miscellaneous Expense	8,100.00
14	Totals	450,000.00	450,000.00

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

a.	Fees earned but unbilled on April 30 were $9,850.
b.	Supplies on hand on April 30 were $4,660.
c.	Depreciation of equipment was estimated to be $6,470 for the year.
d.	The balance in unearned fees represented the April 1 receipt in advance for services to be provided. During April, $15,000 of the services were provided.
e.	Unpaid Wages accrued on April 30 were $5,200.

	Required:
1.	Journalize the adjusting entries necessary on April 30, 2016. Refer to the Chart of Accounts for exact wording of account titles.
2.	Determine the revenues, expenses, and net income of Reliable Service & Repairs before the adjusting entries.
3.	Determine the revenues, expenses, and net income of Reliable Service & Repairs after the adjusting entries.
4.	Determine the effect of the adjusting entries on Karin Bickle, Capital.

Chart of Accounts

CHART OF ACCOUNTS
Reliable Repairs & Service
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 Karin Bickle, Capital 32 Karin Bickle, 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, 2016. 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

Final Questions

2. Determine the revenues, expenses, and net income of Reliable Service & Repairs before the adjusting entries.

Before Adjusting Entries

1	Revenues
2	Expenses
3	Net income

3. Determine the revenues, expenses, and net income of Reliable Service & Repairs after the adjusting entries.

After Adjusting Entries

1	Revenues
2	Expenses
3	Net income

4. Determine the effect of the adjusting entries on Karin Bickle, Capital.

The capital account by

Answer 1

1. Journal entry
Date	Account Tittle & Explanation	Post ref	Debit	Credit
30.04.2016	Accounts Receivable………..Dr		$9,850
	To Fees Earned			$9,850
	(Being fees earned but not billed)
30.04.2016	Supplies Expense…………Dr		$11,540
	To Supplies($16200-4660)			$11,540
	(Being excess treated as expense)
30.04.2016	Depreciation Expense-Equipment …………Dr		$6,470
	To Accumulated Depreciation-Equipment			$6,470
	(Being deprecation transferred to Acc dep)
30.04.2016	Unearned Fees ………….Dr		$15,000
	To Feed Earned			$15,000
	(Being rent recived)
30.04.2016	Salaries and wages expense………..Dr		$5,200
	To Salaries and wages payable			$5,200
	(Being expenses accrued and payable)

2. Computation of Revenue Expense , Expense Net Income before adjusting Entries
Revenue
Fees Earned		$294,750
Less: Expense
Wages Expense	$94,500
Rebt Expense	$72,000
Utilities Expense	$51,750
Misc. Expemnse	$8,100	$226,350
Net Income		$68,400

Computation of Revenue Expense , Net Income after adjusting Entries
Revenue
Fees Earned ($294750+$15000+9850)		$319,600
Less: Expense
Depreciation on Equipment	$6,470
Wages Expense($94500+5200)	$99,700
Rent Expense	$72,000
Utilities Expense	$51,750
Supplies Expense	$11,540
Misc. Expemnse	$8,100	$249,560
Net Income		$70,040

4. Retained Earning increased by $1640(700400-68400) by effect of adjusting Entries