Problem 3-9B Adjusting journal entries (monthly) L04 Ben Hallmark, the owner of

Question

Problem 3-9B Adjusting journal entries (monthly) L04 Ben Hallmark, the owner of Hallmark Surveying Services, has been in business for two years. The unad justed trial balance at December 31, regarding the month just ended, follows: The following additional information is available on December 31, 2017: a. Depreciation on the equipment for the month was $430. b. $9,600 of the balance in Unearned Surveying Revenue is unearned at December 31. c. The balance in Prepaid Rent is for six months of rent beginning December 1. d. Accrued wages at month-end were $12,400. e. December's interest in the amount of $120 had accrued on the notes payable. f. Accrued surveying revenue at month-end totalled $21,800. g. The balance in Prepaid Advertising covers four months of advertising beginning December 15 h. A count of the supplies on December 31 showed $1,320 had been used. i. The December electricity bill for $2,340 was received on December 31. It is unrecorded and unpaid. Required Prepare adjusting journal entries for the month ended December 31, 2017, based on the above. Analysis Component: Explain the differences between Accumulated Depreciation and Depreciation Expense

Explanation / Answer

1.

2.

3.

4.

Analysis:

The financing of the assets is as follows:

Assets financed by the owner : $58,902

Asets financed by debt : $74,260

Equity financing has increased by $30,250 (Net income $54,550 - Withdrawals $24,300)

This is a favourable change as the business will be dependent on own funds which will reduce the risk of not meeting the outside obligations.

Cash Accounts Receivable Supplies Date Debit Credit Balance Date Debit Credit Balance Date Debit Credit Balance Dec.31 15600 Dec.31 29200 Dec.31 1640 15600 Dec.31 21800 51000 Dec.31 1320 320 Prepaid Advertising Prepaid Rent Surveying Equipment Date Debit Credit Balance Date Debit Credit Balance Date Debit Credit Balance Dec.31 1280 Dec.31 17880 Dec.31 58000 Dec.31 160 1120 Dec.31 2980 14900 58000 Accumulated Dep. - Surveying Eqpt. Accounts Payable Interest Payable Date Debit Credit Balance Date Debit Credit Balance Date Debit Credit Balance Dec.31 7348 Dec.31 13800 Dec.31 120 120 Dec.31 430 7778 Dec.31 2340 16140 120 Wages Payable Unearned Surveying Fee Notes Payable Date Debit Credit Balance Date Debit Credit Balance Date Debit Credit Balance Dec.31 12400 12400 Dec.31 14800 Dec.31 36000 12400 Dec.31 5200 9600 36000 Ben Hallmark - Capital Ben Hallmark - Withdrawals Surveying revenue Date Debit Credit Balance Date Debit Credit Balance Date Debit Credit Balance Dec.31 28652 Dec.31 24300 Dec.31 170948 28652 Dec.31 5200 176148 Dec.31 21800 197948 Depreciation Expense - Surveying Eqpt. Salaries Expese Wages Expense Date Debit Credit Balance Date Debit Credit Balance Date Debit Credit Balance Dec.31 430 430 Dec.31 56000 Dec.31 39726 56000 Dec.31 12400 52126 Interest Expense Insurance Expense Rent Expense Date Debit Credit Balance Date Debit Credit Balance Date Debit Credit Balance Dec.31 120 120 Dec.31 6000 Dec.31 2980 2980 6000 Supplies Expense Advertiding Expense Gas ad Oil Expense Date Debit Credit Balance Date Debit Credit Balance Date Debit Credit Balance Dec.31 2958 Dec.31 160 160 Dec.31 6564 Dec.31 1320 4278 6564 Repair Expense Utilities Expense Date Debit Credit Balance Date Debit Credit Balance Dec.31 12400 Dec.31 2340 2340 12400

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