Chapter 3 The Adjusting Process141 For preparing the adjusting entries, the foll
ID: 2420578 • Letter: C
Question
Chapter 3 The Adjusting Process141 For preparing the adjusting entries, the following data were assembl a. Fees earned but unbilled on April 30 were $9,850. b. Supplies on hand on April 30 were $4,660. c. Depreciation of equipment was estimated to be $6,470 for the year. d. The balance in unearned fees represented the April 1 receipt in advance for services to be provided. During April, $15,000 of the services were provided. e. Unpaid wages accrued on April 30 were $5,200. Instructions 1. Journalize the adjusting entries necessary on April 30, 2016. 2. Determine the revenues, expenses and net income of Reliable Service & Repairs before the adjusting entries 3. Determine the revenues, expense, ano net income of Reliable Service & Repairs after the adjusting entries. 4. Determine the effect of the adjusting entries on Retained Earnings.
Explanation / Answer
Answer 1 Adjustment entries Particulars Debit Credit a Accounts Receivable 9850 Fees Earned 9850 b No Journal Entry c Depreciation 6470 Equipment 6470 d Unearned Fees 15000 Fees Earned 15000 e Wages 5200 Wages payable 5200 Answer 2 Revenues,expneses and net income before adjusting entries Revenue In $ Fees earned 294750 Expenses Wages expenses 94500 Rent expenses 72000 Utilities expenses 1750 Mise.expenses 8100 Total expenses 176350 Net Income 118400 Answer 3 Revenues,expneses and net income after adjusting entries Revenue In $ Fees earned 319600 Expenses Decrease in Supplies stock 11540 Wages expenses 99700 Rent expenses 72000 Utilities expenses 1750 Depreciation 6470 Mise.expenses 8100 Total expenses 199560 Net Income 120040 Answer 4 Retained earning before adjustment entries Opening balance 111500 (+) Net Income 118400 Closing balance 229900 Retained earning after adjustment entries Opening balance 111500 (+) Net Income 120040 Closing balance 231540 After adjustment entries there is a marginal rise in retained earning of $1640
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