Adjusting Entries

Chapter3-AdjustingEntries.docx

Home >Business & Finance homework help >Management homework help >Adjusting Entries

Chapter 3 – Adjusting Entries

Selected account balances before adjustment for Atlantic Coast Realty at July 31, the end of the current year, are as follows:

	Debits	Credits
Accounts Receivable	$75,000
Equipment	345,700
Accumulated Depreciation—Equipment		$112,500
Prepaid Rent	9,000
Supplies	3,350
Wages Payable		–
Unearned Fees		12,000
Fees Earned		660,000
Wages Expense	325,000
Rent Expense	–
Depreciation Expense	–
Supplies Expense	–

Data needed for year-end adjustments are as follows:

•

Unbilled fees at July 31, $11,150.

•

Supplies on hand at July 31, $900.

•

Rent expired, $6,000.

•

Depreciation of equipment during year, $8,950.

•

Unearned fees at July 31, $2,000.

•

Wages accrued but not paid at July 31, $4,840.

Required:

Journalize the six adjusting entries required at July 31, based on the data presented.

What would be the effect on the income statement if the adjustments for unbilled fees and accrued wages were omitted at the end of the year?

What would be the effect on the balance sheet if the adjustments for unbilled fees and accrued wages were omitted at the end of the year?

What would be the effect on the “Net increase or decrease in cash” on the statement of cash flows if the adjustments for unbilled fees and accrued wages were omitted at the end of the year?

CHART OF ACCOUNTS

Atlantic Coast Realty

General Ledger

	ASSETS
11	Cash
12	Accounts Receivable
13	Supplies
14	Prepaid Rent
15	Land
16	Equipment
17	Accumulated Depreciation-Equipment

	LIABILITIES
21	Accounts Payable
22	Unearned Fees
23	Wages Payable
24	Taxes Payable
	EQUITY
31	Common Stock
32	Retained Earnings
33	Dividends

	REVENUE
41	Fees Earned
42	Rent Revenue
	EXPENSES
51	Advertising Expense
52	Insurance Expense
53	Rent Expense
54	Wages Expense
55	Supplies Expense
56	Utilities Expense
57	Depreciation Expense
59	Miscellaneous Expense

1. Journalize the six adjusting entries required at July 31, based on the data presented.

General Journal Instructions

Graphical user interface, application, table Description automatically generated

PAGE 10

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1		Adjusting Entries
2
3
4
5
6
7
8
9
10
11
12
13

Questions

2. What would be the effect on the income statement if the adjustments for unbilled fees and accrued wages were omitted at the end of the year?

Select one from below: Enter amount below:

1. Fees earned Over/Understated Amount

2. Wages expense Over/Understated Amount

3. Net income Over/Understated Amount

3. What would be the effect on the balance sheet if the adjustments for unbilled fees and accrued wages were omitted at the end of the year?

Same as above, select over/understated and enter amount

	Over/Understated	Amount
Accounts receivable
Total assets
Wages payable
Total liabilities
Retained earnings
Total liabilities and stockholders’ equity

4. What would be the effect on the “Net increase or decrease in cash” on the statement of cash flows if the adjustments for unbilled fees and accrued wages were omitted at the end of the year?

Options: Overstated/Understated/No effect