Adjusting Entries Selected account balances before adjustment for Intuit Realty

Question

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, $490.

Depreciation of equipment during year, $820.

Rent expired during year, $5,040.

Wages accrued but not paid at November 30, $1,590.

Unearned fees at November 30, $3,180.

Unbilled fees at November 30, $3,780.

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 $54,800 Equipment 85,000 Accumulated Depreciation - Equipment $8,440 Prepaid Rent 6,900 Supplies 1,640 Wages Payable _ Unearned Fees 7,560 Fees Earned 320,030 Wages Expense 107,960 Rent Expense _ Depreciation Expense _ Supplies Expense _

Explanation / Answer

1) ADJUSTING JOURNAL ENTRIES: Supplies expense (1640-490) 1150 Supplies 1150 Depreciation expense-Equipment 820 Accumulated depreciation-Equipment 820 Rent expense 5040 Prepaid rent 5040 Wages expense 1590 Wages payable 1590 Unearned fees (7560-3180) 4380 Fees earned 4380 Accounts receivable 3780 Fees earned 3780 2) Fees earned Decreases by 8160 Depreciation expense Decreases by 820 Net income Decreases by 7340 3) Accumulated depreciation Decreases by 820 Total assets Increases by 820 Unearned fees Increases by 4380 Total liabilities Increases by 4380 Owner's equity Decreases by 3560 Total liabilities and owner's equity Increases by 820 4) No effect on 'Net increase or decrease of cash'.

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