Homework SourseAdjusting Entries Selected account balances before adjustmen
Adjusting Entries
Selected account balances before adjustment for Intuit Realty at November 30, the end of the current year, follow:
Data needed for year-end adjustments are as follows:
Required:
Supplies on hand at November 30, $470.
Depreciation of equipment during year, $780.
Rent expired during year, $4,780.
Wages accrued but not paid at November 30, $1,510.
Unearned fees at November 30, $3,020.
Unbilled fees at November 30, $3,590.
1. Journalize the six adjusting entries required at November 30, based on the data presented.
2. What would be the effect on the income statement if the adjustments for equipment depreciation and unearned fees were omitted at the end of the year? Enter all amounts as positive numbers.
3. What would be the effect on the balance sheet if the adjustments for equipment depreciation and unearned fees were omitted at the end of the year? Enter all amounts as positive numbers.
4. What would be the effect on the “Net increase or decrease in cash” on the statement of cash flows if the adjustments for equipment depreciation and unearned fees were omitted at the end of the year?
| Debits | Credits | |||
| Accounts Receivable | $52,000 | |||
| Equipment | 80,000 | |||
| Accumulated Depreciation - Equipment | $8,010 | |||
| Prepaid Rent | 6,600 | |||
| Supplies | 1,560 | |||
| Wages Payable | _ | |||
| Unearned Fees | 7,180 | |||
| Fees Earned | 303,680 | |||
| Wages Expense | 102,440 | |||
| Rent Expense | _ | |||
| Depreciation Expense | _ | |||
| Supplies Expense | _ |
Solution
Answer 1
Answer 2
Omitting the adjustment entry for deprecation will lead to reduction in expense by that amount and subsequently increase the net income.
Whereas omitting the adjustment entry for unearned fees will reduce the fees earned and subsequently reduce the net income
Answer 3
Answer 4
Since both the omitted transcations are non cash in nature it will not have any effect on the cash flow statement
| Date | Particulars | Amount | Amount |
| Nov-30 | Supplies Expense | 1090 | |
| Supplies | 1090 | ||
| (Being supplies used during the month) | |||
| Nov-30 | Depreciation Expense | 780 | |
| Accumulated Depreciation | 780 | ||
| (Being depreciation expense on equipment for the current year) | |||
| Nov-30 | Rent Expense | 4780 | |
| Prepaid Rent | 4780 | ||
| (Being rent expense for the current year adjusted against prepaid rent) | |||
| Nov-30 | Wages Expense | 1510 | |
| Wages Payable | 1510 | ||
| (Being wages due but not paid for November) | |||
| Nov-30 | Unearned Fees | 4160 | |
| Fees Earned | 4160 | ||
| (Being adjustment entry for unearned fees balance recorded) | |||
| Nov-30 | Accounts Receivable | 3590 | |
| Fees Earned | 3590 | ||
| (Being unbilled fees accounted for) |
