Question

It is now 30 June and our business is preparing adjustments via a worksheet.

Complete the following adjustments in the worksheet using the number next to each adjustment

as the ref (if no adjustment is necessary enter "0" in the relevant box).

All answers are numbers which consist only of the digits 0 to 9. Symbols or punctuation marks

should NOT be incorporated in answers.

Then determine whether owners equity will increase or decrease.

1 Prepaid 12,000 for annual insurance policy on 1 April. Adjustments have been done for April and May.

2 Earned 2,000 of Subscriptions Revenue which had already being paid for by the client.

3 Work in Progress (for Services) is calculated to be 3,000. (Use accrued revenue).

4 Office Supplies were counted on 30 June. They totalled 4,000.

5 Interest on Note Payable is 500. This is payable in July.

Worksheet for the month ended 30 June
	Unadjusted TB			Adjustments		Adjusted TB
Account	Dr	Cr	Ref	Dr	Cr	Dr	Cr
Cash At Bank	30,000					Answer Here
Office Supplies	5,000		Answer Here	Answer Here	Answer Here	Answer Here
Prepaid Insurance	10,000		Answer Here	Answer Here	Answer Here	Answer	Here
Accrued Revenue	0		Answe Herer	Answe Herer	Answer Here	Answer	Here
Interest Payable		0	Answer Here	Answer Here	Answe Herer		Answer Here
Unearned Revenue		3,000	Answer Here	Answer Here	Answer Here		Answer Here
Owners Capital		20,000					Answer Here
Income Summary
Service Revenue		25,000	Answer  Here	Answer  Here	Answer Here		Answer
Subscriptions Revenue		35,000	Answer Here	Answer Here	Answer Here		Answer Here
Interest Expense	6,000		Answer Here	Answer Here	Answer Here	Answer Here
Insurance Expense	25,000		Answer Here	Answer Here	Answer Here	Answer Here
Supplies Expense	7,000		Answer Here	Answer Here	Answer Here	Answer Here
Total	83,000	83,000				Answer Here	Answer Here

Will owners equity increase or decrease?

AnswerDecreaseIncreaseCannot say

Answer 1

Solution:

Worksheet for the month ended June 30
Account	Unadjusted balance		Ref	Adjustments		Adjusted Trial Balance
	Debit	Credit		Debit	Credit	Debit	Credit
Cash at Bank	$30,000.00		0			$30,000.00
Office Supplies	$5,000.00		4		$1,000.00	$4,000.00
Prepaid Insurance	$10,000.00		1		$1,000.00	$9,000.00
Accured Revenue	$0.00		3	$3,000.00		$3,000.00
Interest Payable		$0.00	5		$500.00		$500.00
Unearned Revenue		$3,000.00	2	$2,000.00			$1,000.00
Owner's Capital		$20,000.00	0				$20,000.00
Income Summary
Service Revenue		$25,000.00	3		$3,000.00		$28,000.00
Subscription Revenue		$35,000.00	2		$2,000.00		$37,000.00
Interest expense	$6,000.00		5	$500.00		$6,500.00
Insurance expense	$25,000.00		1	$1,000.00		$26,000.00
Supplies Expense	$7,000.00		4	$1,000.00		$8,000.00
Total	$83,000.00	$83,000.00				$86,500.00	$86,500.00
Will owners equity increase or decrease?				Owner equity will increase as increase in revenue due to adjustment is $5,000 which higher than increase in expenses due to adjustment entry i.e. $2,500