Adjusting Entries and Errors At the end of June, the first month of operations,

Question

Adjusting Entries and Errors

At the end of June, the first month of operations, the following selected data were taken from the financial statements of Beth Cato, an attorney:

In preparing the financial statements, adjustments for the following data were overlooked:

Unbilled fees earned at June 30, $9,730.

Depreciation of equipment for June, $4,400.

Accrued wages at June 30, $3,110.

Supplies used during June, $2,720.

Required:

1. Journalize the entries to record the omitted adjustments.

a.

b.

c.

d.

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1. Keep in mind that you will be making an adjusting entry for each of these that affects at least one income statement account (revenue or expense) and one balance sheet account (asset or liability). Remember, four different categories of adjusting entries include prepaid expenses (deferred expenses), unearned revenues (deferred revenues), accrued expenses (accrued liabilities), and accrued revenues (accrued assets) plus the adjustment for depreciation expense.

Learning Objective 2 , Learning Objective 3 .

2. Determine the correct amount of net income for June and the total assets, liabilities, and stockholders' equity at June 30. In addition to indicating the corrected amounts, indicate the effect of each omitted adjustment by completing the columnar table below. Use the minus sign to indicate decreases. If an effect is zero, enter "0". Adjustment (a) is presented as an example.

Net income for June $164,200 Total assets at June 30 916,000 Total liabilities at June 30 302,000 Total stockholders' equity at June 30 614,000

Explanation / Answer

a

Dr Unearned Revenue 9,730

Cr Service revenue 9,730

b

Dr Depreciation 4,400

Cr Accumulated Depreciation- 4,400

c

Dr Wages 3,110

Cr Accrued Wages3,110

d

. Dr Supplies Expense 2,720

Cr Supplies 2,720

Beth Cato For the Month of June 30 Net Income Total Assets = Total Liabilities + Total Stockholders' Equity Reported amounts $164,200 $916,000 $302,000 $614,000 Corrections: Adjustment (a) 9,730 9,730 0 9,730 Adjustment (b) -4,400 -4,400 -4,400 Adjustment (c) -2,720 -2,720 -2,720 Adjustment (d) -3,110 0 3110 -3,110 Corrected amounts $163,700 $918,610 $305,110 $613,500

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