Question

In: Accounting

Crazy Mountain Outfitters Co., an outfitter store for fishing treks, prepared the following unadjusted trial balance...

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, 20Y5
Debit
Balances
Credit
Balances
Cash 13,770
Accounts Receivable 91,430
Supplies 22,030
Equipment 468,860
Accounts Payable 21,480
Unearned Fees 24,240
Common Stock 55,000
Retained Earnings 269,000
Dividends 18,180
Fees Earned 550,800
Wages Expense 127,790
Rent Expense 97,490
Utilities Expense 69,950
Miscellaneous Expense 11,020
920,520 920,520

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

  • Supplies on hand on April 30 were $8,140.
  • Fees earned but unbilled on April 30 were $9,970.
  • Depreciation of equipment was estimated to be $13,770 for the year.
  • Unpaid wages accrued on April 30 were $1,760.
  • The balance in unearned fees represented the April 1 receipt in advance for services to be provided. Only $19,150 of the services was provided between April 1 and April 30.

Required:

1. Journalize the adjusting entries necessary on April 30, 20Y5. If an amount box does not require an entry, leave it blank.

Apr. 30
30
30
30
30

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

Revenues $
Expenses
Net income $

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

Revenues $
Expenses
Net income $

4. Determine the effect of the adjusting entries on Retained Earnings.
Retained Earnings   by $.

Solutions

Expert Solution

1) Adjusting Entries
Particulars Debit Credit
a) Supplies Expense $ 13,890.00
To Supplies $ 13,890.00
($ 22030 - $ 8140)
b) Accounts Receivable $   9,970.00
To Fees Earned $   9,970.00
c) Depreciation Expense $ 13,770.00
To Accumulated Depreciation $ 13,770.00
d) Wages Expense $   1,760.00
To Wages Payable $   1,760.00
e) Unearned Fees $ 19,150.00
To Fees Earned $ 19,150.00
2) Revenues
Fees Earned $ 550,800.00
Expenses
Wages Expense $ 127,790.00
Rent Expense $   97,490.00
Utilities Expense $   69,950.00
Miscellaneous Expense $   11,020.00
$ 306,250.00
Net Income ($ 550800 - $ 306250) $ 244,550.00
3) Revenues
Fees Earned $ 579,920.00
($ 550800 + $ 9970 + $ 19150)
Expenses
Wages Expense ($ 127790 + $ 1760) $ 129,550.00
Rent Expense $   97,490.00
Utilities Expense $   69,950.00
Miscellaneous Expense $   11,020.00
Depreciation Expense $   13,770.00
Supplies Expense $   13,890.00
$ 335,670.00
Net Income ($ 579920 - $ 335670) $ 244,250.00
4) Because of the adjusting entries,
retained earnings decreased by $ 300.00
($ 244550 - $ 244250)

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