t View History Bookmarks Window Help 0,3-Ex 2-4, 6-10 2.4,6-10 6 Following are t

Question

t View History Bookmarks Window Help 0,3-Ex 2-4, 6-10 2.4,6-10 6 Following are two income statements for Alexis Co. for the year ended December 31. The left column is prepared before any adjusting entries are recorded, and the right column includes the effects of adjusting entries. The company records cash receipts and paeyments ALEXIS co Tor Tear Ended December 31 Fees earned Commissions earned Total revenues 24,000 $30.600 42,500--,300 . 566, 500 Expenses Depreciation expense-Computers 1.650 Depreciation expense-office furniture Salaries Insurance Rent expense 12,500 15,195 1,430 4,5004,500 Office supplies expenae 3,0003,00 Utilitie expens Total expenses 21,250 29,555 Net income Analyze the statements and prepare the eight adjusting entries that likely were recorded. (Note 30% of the S6600 adjustment for Fees Earned has been earned but not billed, and the other 70% has been earned by performing services that were paid for in advance)

Explanation / Answer

Adjustment Entries

date

explanation

debit

credit

1-

accrued revenue

1980

fees earned

1980

2-

unearned revenue

4620

fees earned

4620

3-

depreciation expense-computer

1650

accumulated depreciation-computers

1650

4-

depreciation expense- office furniture

1925

accumulated depreciation-office furniture

1925

5-

salary expense

2695

cash or salaries payable

2695

(if cash is paid then cash would be credited and if not paid then salary payable would be credited)

6-

insurance expense

1430

cash or prepaid insurance

1430

(if cash is paid then cash would be credited and if not paid then prepaid insurance if given in balance sheet would be credited)

7-

office supplies expense

528

supplies

528

8-

utilities expense

cash or utilities expense payable

(if cash is paid then cash would be credited and if cash is not paid then utilities payable would be credited)

Adjustment Entries

date

explanation

debit

credit

1-

accrued revenue

1980

fees earned

1980

2-

unearned revenue

4620

fees earned

4620

3-

depreciation expense-computer

1650

accumulated depreciation-computers

1650

4-

depreciation expense- office furniture

1925

accumulated depreciation-office furniture

1925

5-

salary expense

2695

cash or salaries payable

2695

(if cash is paid then cash would be credited and if not paid then salary payable would be credited)

6-

insurance expense

1430

cash or prepaid insurance

1430

(if cash is paid then cash would be credited and if not paid then prepaid insurance if given in balance sheet would be credited)

7-

office supplies expense

528

supplies

528

8-

utilities expense

cash or utilities expense payable

(if cash is paid then cash would be credited and if cash is not paid then utilities payable would be credited)

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