Astromech Travel Court was organized on July 1, 2013, by Jessica Browning. Jessi

Question

Astromech Travel Court was organized on July 1, 2013, by Jessica Browning. Jessica is a good manager but a poor accountant. From the trial balance prepared by a part-time bookkeeper, Jessica prepared the following income statement for her fourth quarter, which ended June 30, 2014. Jessica suspected that something was wrong with the statement because net income had never exceeded $30,000 in any one quarter. Knowing that you are an experienced accountant, she asks you to review the income statement and other data. You first look at the trial balance. In addition to the account balances reported above in the income statement, the trial balance contains the following additional selected balances at June 30, 2014. You then make inquiries and discover the following. Travel court rental revenues include advanced rental payments received for summer occupancy, in the amount of $57,511. There were $1,865 of supplies on hand at June 30. Prepaid insurance resulted from the payment of a one-year policy on April 1, 2014. The mail in July 2014 brought the following bills: advertising for the week of June 24, $117; repairs made June 18, $4,599; and utilities for the month of June, $218. There are three employees who receive wages that total $307 per day. At June 30, four days' wages have been incurred but not paid. The note payable is a 6% note dated May 1, 2014, and due on July 31, 2014. Income tax of $13,953 for the quarter is due in July but has not yet been recorded. Prepare any adjusting journal entries required at June 30, 2014.

Explanation / Answer

1) unearned revenue (cr) $57,511
cash (db) $57,511

2) supplies expense(db) 9129-1865=$7264
suppllies (cr) 7264

3)prepaid insurance (cr) 14520*(3/12)=$3630
insurance expesne (db)$3630

4) advertising expense (db) 117
repaisr expense (db) 4599
utility expense (db) 218

advertisen payable(cr) 117
repair payable (cr) 4599
utility payable (cr) 218

5)wages and salary (db) 4*307=$1228
wages and salary payable (cr) 1228

6)interest payable (cr) 15600*(6%*2/12)=$156
interest expebse (db) 156

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