Logan Krause started her own consulting firm, Krause Consulting, on May 1, 2017.

Question

Logan Krause started her own consulting firm, Krause Consulting, on May 1, 2017. The trial balance at May 31 is as follows.

In addition to those accounts listed on the trial balance, the chart of accounts for Krause Consulting also contains the following accounts and account numbers: No. 150 Accumulated Depreciation—Equipment, No. 212 Salaries and Wages Payable, No. 631 Supplies Expense, No. 717 Depreciation Expense, No. 722 Insurance Expense, and No. 732 Utilities Expense.
Other data:
1. $900 of supplies have been used during the month.
2. Utilities expense incurred but not paid on May 31, 2017, $250.
3. The insurance policy is for 2 years.
4. $400 of the balance in the unearned service revenue account remains unearned at the end of the month.
5. May 31 is a Wednesday, and employees are paid on Fridays. Krause Consulting has two employees, who are paid $920 each for a 5-day work week.
6. The office furniture has a 5-year life with no salvage value. It is being depreciated at $190 per month for 60 months.
7. Invoices representing $1,700 of services performed during the month have not been recorded as of May 31.

Instructions
(a) Prepare the adjusting entries for the month of May. Use J4 as the page number for your journal.
(b) Post the adjusting entries to the ledger accounts. Enter the totals from the trial balance as beginning account balances and place a check mark in the posting reference column.
(c) Prepare an adjusted trial balance at May 31,2017.

***(d) General Journal, General Ledger, Adjusted Trial Balance, Income Statement, Owners Equity, Balance Sheet.***

Explanation / Answer

a) Adjusting entries for the month of May: 31-May-17 Supplies Expense 900 Supplies 900 (supplies used during the month) Utilities expense 250 Utilities payable 250 (expense incurred but not paid) Insurance expense 150 Prepaid insurance 150 (expense for the period Unearned Service Revenue Serviec revenue 1600 (revenue earned during the mointh) Salaries & Wages Expense 1104 Salaries & Wages payable 1104 (salaries accrued for two employees) Depreciation Expense 190 Accumulated depreciation 190 (depreciation for the month) Accounts Receivable 1700 Service Revenue 1700 c) Adjusted Trial Balance: Unadjusted TB Adjustments Adjusted TB Debit Credit Debit Credit Debit Credit 101 Cash 4500 4500 112 Accounts Receivable 6000 1700 7700 126 Supplies 1900 900 1000 130 Prepaid insurance 3600 150 3450 149 Equipment 11400 11400 150 Accumulated depreciation-Eqpmt 190 190 201 Accounts payable 4500 4500 209 Unearned Service Revenue 2000 1600 400 212 Salaries & Wages Payable 1104 1104 Utilitites Payable 250 250 301 Owners Capital 18700 18700 400 Service Revenue 9500 3300 12800 631 Supplies Expense 900 900 717 Depreciation Expense 190 190 722 Insurance Expense 150 150 726 Salaries & Wages Expense 6400 1104 7504 729 Rent Expense 900 900 732 Utilities Expense 250 250 34700 34700 5894 5894 37944 37944 Note: Salaries & Wages payable is taken as(920/5) *2 920 for five days, so for three days mpnday to Wednesday d) Income Statement: Service Revenue 12800 Less: Expenses Supplies Expense 900 Depreciation Expense 190 Insurance Expense 150 Salaries & Wages Expense 7504 Rent Expense 900 Utilities Expense 250 9894 Net Income 2906 Equity Owners Capital 18700 Retained Earnings 2906 21606 Balance Sheet: ASSETS: Current Assets: Cash 4500 Accounts Receivable 7700 Supplies 1000 Prepaid insurance 3450 16650 Fixed Assets: Equipment 11400 Less: Accumulated depreciation 190 11210 TOTAL ASSETS 27860 LIABILITIES: Current Liabiliies: Accounts payable 4500 Unearned Service Revenue 400 Salaries & Wages Payable 1104 Utilitites Payable 250 6254 Long Term Liabilities: 0 Equity 21606 TOTAL LIABILITIES & EQUITY 27860 Closing Entries: Service Revenue 12800 Income Summary 12800 (service revenue closed to income summary) Income Summary 9894 Supplies Expense 900 Depreciation Expense 190 Insurance Expense 150 Salaries & Wages Expense 7504 Rent Expense 900 Utilities Expense 250 (expenses closed to Income summary) Income Summary 2906 Retained Earnings 2906 (net income closed to income summary)

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