Selected account balances before adjustment for Alantic Coas

Selected account balances before adjustment for Alantic Coast Realty at July 31, 2016, the end of the current year, are as follows:

Debits

Credits

Data needed for year-end adjustments are as follows:

The systematic periodic transfer of the cost of a fixed asset to an expense account during its expected useful life.

none

X

Chart of Accounts

none

X

Journal

1. Journalize the six adjusting entries required at July 31, based on the data presented. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

1

Adjusting Entries

2

3

4

5

6

7

8

9

10

11

12

13

Solution

1

Adjusting Entries

2

3

4

5

6

7

8

9

10

11

12

13

Points:

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Explanation

none

X

Final Questions

2. What would be the effect on the income statement if adjustments (a) and (f) were omitted at the end of the year?

Over/Understated

Amount

Understated

Overstated

No effect

Understated

Overstated

No effect

Understated

Overstated

No effect

Points:

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Explanation

3. What would be the effect on the balance sheet if adjustments (a) and (f) were omitted at the end of the year?

Over/Understated

Amount

Understated

Overstated

No effect

Understated

Overstated

No effect

Understated

Overstated

No effect

Understated

Overstated

No effect

Understated

Overstated

No effect

Understated

Overstated

No effect

Points:

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Explanation

4. What would be the effect on the “Net increase or decrease in cash” on the statement of cash flows if adjustments (a) and (f) were omitted at the end of the year? selector 1

Understated

Overstated

No effect

Points:

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Explanation

	Debits	Credits
Accounts Receivable	$73,600
Equipment	346,600
Accumulated Depreciation—Equipment		$107,000
Prepaid Rent	8,550
Supplies	3,090
Wages Payable		–
Unearned Fees		11,000
Fees Earned		672,400
Wages Expense	337,500
Rent Expense	–
Depreciation Expense	–
Supplies Expense	–

Solution

2.

3.

4. No effect.

Since no cash is involved.

1	Date	Description	Debit	Credit
a.	Jul. 31	Accounts receivable	10250
		Fees earned		10250
		(To record unbilled fees)
b.	Jul. 31	Supplies expense ($3090 - $710)	2380
		Supplies		2380
		(To record supplies expense)
c.	Jul. 31	Rent expense	5700
		Prepaid rent		5700
		(To record rent expired)
d.	Jul. 31	Depreciation expense	9500
		Accumulated depreciation-office equipment		9500
		(To record depreciation expense)
e.	Jul. 31	Unearned fees	8660
		Fees earned ($11000 - $2340)		8660
		(To record fees earned)
f.	Jul. 31	Wages expense	4700
		Wages payable		4700
		(To record accrued wages)