15 a) If a company fails to make an adjusting entry to record supplies expense,

Question

15 a) If a company fails to make an adjusting entry to record supplies expense, then

a. owner's equity will be understated.

b.   expense will be understated.

c. assets will be understated.

d.   net income will be understated.

b. On June 1, during its first month of operations, Brodeur Spa purchased supplies for $4,200 and debited the supplies account for that amount. At June 30, an inventory of supplies showed

$1,000 of supplies on hand. What adjusting journal entry should be made for June?

c1. Trinity College sold season tickets for the 2018 football season for $320,000. A total of 8 games will be played during September, October and November. In September, three games were played. In October, three games were played. What is the balance in Unearned Ticket

Revenue as of October 31 (after adjusting entries has been made)?

c2. Please write the journal entries for the following transactions for Rindler Company for July

2018, the company’s first month of operations. You may omit explanations for the transactions.

a. Rich Rindler invested $38,000 cash to start an appliance repair business.

b.   Hired an employee to be paid $500 per week, starting tomorrow.

c. Paid two years’ rent in advance, $10,800.

d.   Paid the worker’s weekly wage.

e. Recorded service revenue earned and received for the week, $2,900.

Explanation / Answer

15 (a) b.   expense will be understated. Reason - Supplies expenses is not recorded, it means expenses are understated and assets are overstated (b) Accounst titles & Explanation Debit Credit Supplies Expenses $3,200 ($4,200-$1,000) Supplies $3,200 (c) - 1 Accounst titles & Explanation Debit Credit Cash $3,20,000 Unearned Ticket Revenue $3,20,000 Unearned Ticket Revenue $2,40,000 Revenue $2,40,000 Unearned Ticket Revenue Balance $80,000 (c) - 1 Accounst titles & Explanation Debit Credit a Cash $38,000 Rich Rindler's Capital $38,000 b No Entry c Prepaid Rent $10,800 Cash $10,800 Rent Expenses $450 ($10,800/24) Prepaid Rent $450 d Salaries & Wages Expenses $500 Cash $500 e Cash $2,900 Service revenue $2,900

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