A Using the information presented above for Magic Cleaning S

A. Using the information presented above for Magic Cleaning Services, determine Net Income AFTER all adjustments have been recorded:

B. Using the information presented for Magic Cleaning Services, IF none of the (6) adjusting journal entries had been recorded, determine the effect on Total Assets

C. Using the information presented for Magic Cleaning Services, IF none of the (6) adjusting journal entries had been recorded, determine the effect on Total Liabilities

D. Using the information presented for Magic Cleaning Services, IF none of the (6) adjusting journal entries had been recorded, determine the effect on Total EQUITY.

I don\'t understand how to do adjusting journal entries for my accounting homework, can someone work them out and explain to me how they would have an affect on the accounts.

QUESTION 4 USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT (5) QUESTIONS: Magic Cleaning Services has a fiscal year end of December 31st. It is in its first year of operations. As of December 31, Magic has the following unadjusted trial balance: Account Cash Accounts Receivable Supplies Building Accounts Payable Unearned Service Revenue Common Stock Retained Earnings Service Revenue Wage Expense Rent Expense Utilities Expense Debit $ 430,900 $158,000 $111,000 S 90,000 Credit $ 45,900 108,000 100,000 0- 619,200 $ 48,600 12,400 $ 6,200 $16,000 $ 873,100 TOTALS 873,100 In addition, Magic has not yet adjusted for the following: I. The building was purchased on March 1 of the current year. It has a 30-year life, 10% salvage value and Magic uses the straight-line method for depreciation. 2. On September 1, Magic prepaid $12.400 for 10 months of rent on a warehouse. The original entry was recorded as Rent Expense 3. By December 31st 30% of the of the services related to the Unearned Revenues had been performed. 4. Wages of $4,600 should be accrued and are scheduled to be paid on January 2. 5. Supplies of $98,000 were still on hand at year end. 6. Based on industry averages, it is estimated that 3% of the accounts receivable will prove to be uncollectible. Required:

Solution

A. Adjusting Journal Entries Sl.no. Account Title Debit Credit 1.. Depreciation expense-Buildings 2250 Accumulated Depreciation-Buildings 2250 (90000-(10%*90000))/30Yrs.*10 mths./12 mths. 2.. Prepaid rent 7440 Rent expense 7440 12400*6 mths./10 mths. 3.. Unearned Service Revenue 32400 Service Revenue 32400 (30%*108000) 4.. Wage Expense 4600 Wages payable 4600 5.. Supplies Expense 13000 Supplies 13000 (111000-98000) 6.. Bad debt expense 4740 Allowance for Uncollectibles 4740 (158000*3%) Trial Balance Unadjusted Adjusting Entries Adjusted T/B Account Debit Credit Debit Credit Debit Credit Cash 430900 430900 Accounts Receivable 158000 158000 Prepaid rent 7440 7440 Supplies 111000 -13000 98000 Building 90000 90000 Accumulated Depreciation-Buildings 2250 2250 Allowance for Uncollectibles 4740 4740 Accounts Payable 45900 45900 Wages payable 4600 4600 Unearned Service Revenue 108000 -32400 75600 Common Stock 100000 100000 Retained Earnings 0 Service Revenue 619200 32400 651600 Supplies Expense 13000 13000 Wage Expense 48600 4600 53200 Rent Expense 12400 -7440 4960 Utilities Expense 6200 6200 Administrative Expense 16000 16000 Depreciation expense-Buildings 2250 2250 Bad debt expense 4740 4740 Total 873100 873100 11590 11590 884690 884690 A. Income Statement (Afterall adjustments) Service Revenue 651600 Less: Operating Expenses: Supplies Expense 13000 Wage Expense 53200 Rent Expense 4960 Utilities Expense 6200 Administrative Expense 16000 Depreciation expense-Buildings 2250 Bad debt expense 4740 100350 Net Operating Income 551250 Balance sheet Current assets: Cash 430900 Accounts Receivable 158000 Less: Allowance for Uncollectibles -4740 153260 Prepaid rent 7440 Supplies 98000 Total Current assets 689600 Fixed assets: Building 90000 Less:Accumulated Depreciation-Buildings -2250 Total fixed assets 87750 Total assets 777350 Liabilities & Equity Current Liabilities Accounts Payable 45900 Wages payable 4600 Unearned Service Revenue 75600 Total Current Liabilities 126100 Owner\'s Equity: Common Stock 100000 Retained Earnings 551250 651250 Total Owner\'s equity Total Liabilities & Equity 777350 B.. Value of assets Before & after 6 entries Before After Cash 430900 430900 Accounts Receivable 158000 158000 Prepaid rent 7440 Supplies 111000 98000 Building 90000 90000 Accumulated Depreciation-Buildings -2250 Allowance for Uncollectibles -4740 Total 789900 777350 C..Value of Liabilities Before & after 6 entries Before After Accounts Payable 45900 45900 Wages payable 4600 Unearned Service Revenue 108000 75600 Total 153900 126100 D..Value of Equity Before & after 6 entries& cl.entries to income statement Common Stock 100000 100000 Retained Earnings 0 551250 Total 100000 651250 Closing entries to Income statement Debit Credit 1.Income Summary 100350 Supplies Expense 13000 Wage Expense 53200 Rent Expense 4960 Utilities Expense 6200 Administrative Expense 16000 Depreciation expense-Buildings 2250 Bad debt expense 4740 2.Service Revenue 651600 Income Summary 651600 3. Income Summary 551250 Retained Earnings 551250 (651600-100350) Post-Closing Trial Balance Debit Credit Cash 430900 Accounts Receivable 158000 Prepaid rent 7440 Supplies 98000 Building 90000 Accumulated Depreciation-Buildings 2250 Allowance for Uncollectibles 4740 Accounts Payable 45900 Wages payable 4600 Unearned Service Revenue 75600 Common Stock 100000 Retained Earnings 551250 Total 784340 784340