Question

Reece Financial Services Co., which specializes in appliance repair services, is owned and operated by Joni Reece. Reece Financial Services Co.’s accounting clerk prepared the following unadjusted trial balance at July 31, 2016:

Reece Financial Services Co.

UNADJUSTED TRIAL BALANCE

July 31, 2016

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash	10,200.00
2	Accounts Receivable	34,750.00
3	Prepaid Insurance	6,000.00
4	Supplies	1,725.00
5	Land	50,000.00
6	Building	155,750.00
7	Accumulated Depreciation-Building		62,850.00
8	Equipment	45,000.00
9	Accumulated Depreciation-Equipment		17,650.00
10	Accounts Payable		3,750.00
11	Unearned Rent		3,600.00
12	Joni Reece, Capital		153,550.00
13	Joni Reece, Drawing	8,000.00
14	Fees Earned		158,600.00
15	Salaries and Wages Expense	56,850.00
16	Utilities Expense	14,100.00
17	Advertising Expense	7,500.00
18	Repairs Expense	6,100.00
19	Miscellaneous Expense	4,025.00
20	Totals	400,000.00	400,000.00

The data needed to determine year-end adjustments are as follows:

	a. Depreciation of building for the year, $6,400.
	b. Depreciation of equipment for the year, $2,800.
	c. Accrued salaries and wages at July 31, $900.
	d. Unexpired insurance at July 31, $1,500.
	e. Fees earned but unbilled on July 31, $10,200.
	f. Supplies on hand at July 31, $615.
	g. Rent unearned at July 31, $300.

	Required:
1.	Journalize the adjusting entries using the following additional accounts: Salaries and Wages Payable; Rent Revenue; Insurance Expense; Depreciation Expense-Building; Depreciation Expense-Equipment; and Supplies Expense. Refer to the Chart of Accounts for exact wording of account titles.
2.	Determine the balances of the accounts affected by the adjusting entries and prepare an adjusted trial balance.

Chart of Accounts

CHART OF ACCOUNTS
Reece Financial Services Co.
General Ledger
ASSETS 11 Cash 12 Accounts Receivable 13 Prepaid Insurance 14 Supplies 15 Land 16 Building 17 Accumulated Depreciation-Building 18 Equipment 19 Accumulated Depreciation-Equipment LIABILITIES 21 Accounts Payable 22 Unearned Rent EQUITY 31 Joni Reece, Capital 32 Joni Reece, Drawing	REVENUE 41 Fees Earned EXPENSES 51 Salaries and Wages Expense 52 Utilities Expense 53 Advertising Expense 54 Repairs Expense 59 Miscellaneous Expense

Journal

1. Journalize the adjusting entries using the following additional accounts: Salaries and Wages Payable; Rent Revenue; Insurance Expense; Depreciation Expense-Building; Depreciation Expense-Equipment; and Supplies Expense. 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
12
13
14
15

Adjusted Trial Balance

2. Determine the balances of the accounts affected by the adjusting entries and prepare an adjusted trial balance.

Reece Financial Services Co.

ADJUSTED TRIAL BALANCE

July 31, 2016

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash
2	Accounts Receivable
3	Prepaid Insurance
4	Supplies
5	Land
6	Building
7	Accumulated Depreciation-Building
8	Equipment
9	Accumulated Depreciation-Equipment
10	Accounts Payable
11	Unearned Rent
12	Salaries and Wages Payable
13	Joni Reece, Capital
14	Joni Reece, Drawing
15	Fees Earned
16	Rent Revenue
17	Salaries and Wages Expense
18	Utilities Expense
19	Advertising Expense
20	Depreciation Expense-Building
21	Repairs Expense
22	Insurance Expense
23	Depreciation Expense-Equipment
24	Supplies Expense
25	Miscellaneous Expense
26	Totals

Answer 1

1.

	Date	Description	Post. Ref.	Debit	Credit
1	Jul-31	Adjusting Entries
2	a.	Depreciation expense-building		6400
3		Accumulated depreciation-building			6400
4	b.	Depreciation expense-equipment		2800
5		Accumulated depreciation-equipment			2800
6	c.	Salaries and wages expense		900
7		Salaries and wages payable			900
8	d.	Insurance expense ($6000 - $1500)		4500
9		Prepaid insurance			4500
10	e.	Accounts receivable		10200
11		Fees earned			10200
12	f.	Supplies expense ($1725 - $615)		1110
13		Supplies			1110
14	g.	Unearned rent ($3600 - $300)		3300
15		Rent revenue ($3600 - $300)			3300

2.

	Account Title	Debit	Credit
1	Cash	10200
2	Accounts receivable	44950
3	Prepaid insurance	1500
4	Supplies	615
5	Land	50000
6	Building	155750
7	Accumulated depreciation-building		69250
8	Equipment	45000
9	Accumulated depreciation-equipment		20450
10	Accounts payable		3750
11	Unearned rent		300
12	Salaries and wages payable		900
13	Joni Reece, capital		153550
14	Joni Reece, drawing	8000
15	Fees earned		168800
16	Rent revenue		3300
17	Salaries and wages expense	57750
18	Utilities expense	14100
19	Advertising expense	7500
20	Depreciation expense-building	6400
21	Repairs expense	6100
22	Insurance expense	4500
23	Depreciation expense-equipment	2800
24	Supplies expense	1110
25	Miscellaneous expense	4025
26	Totals $	420300	420300