Determine the correct amount of net income for june and the

Assignment Help Accounting Basics

Reference no: EM131092396

Classifying types of adjustments

Classify the following items as (a) prepaid expense, (b) unearned revenue, (c) accrued revenue, or (d) accrued expense.
1. A three-year premium paid on a fire insurance policy...
2. Fees earned but not yet received.
3. Fees received but not yet earned.
4. Salary owed but not yet paid.
5. Subscriptions received in advance by a magazine publisher.
6. Supplies on hand.
7. Taxes owed but payable in the following period.
8. Utilities owed but not yet paid.
Adjusting entries

Econo Company, an electronics repair store, prepared the unadjusted trial balance shown below at the end of its first year of operations.

Econo Company

Unadjusted Trial Balance

April 30, 2012

Debit Credit

Balances Balances

Cash ........................................................................................ 13,800

Accounts Receivable................................................................ 90,000

Supplies.................................................................................... 21,600

Equipment.............................................................................. 454,800

Accounts Payable...................................................................................................... 21,000

Unearned Fees .......................................................................................................... 24,000

Randy Huntsinger, Capital....................................................................................... 312,000

Randy Huntsinger, Drawing...................................................................................... 18,000

Fees Earned............................................................................................................. 543,000

Wages Expense...................................................................... 126,000

Rent Expense........................................................................... 96,000

Utilities Expense....................................................................... 69,000

Miscellaneous Expense............................................................ 10,800

900,000 900,000

For preparing the adjusting entries, the following data were assembled:

a. Fees earned but unbilled on April 30 were $10,000.
b. Supplies on hand on April 30 were $8,150.
c. Depreciation of equipment was estimated to be $13,800 for the year.
d. The balance in unearned fees represented the April 1 receipt in advance for services to be provided. Only $19,000 of the services was provided between April 1 and April 30.
e. Unpaid wages accrued on April 30 were $1,770.

Instructions

1. Journalize the adjusting entries necessary on April 30, 2012.
2. Determine the revenues, expenses, and net income of Econo Company before the adjusting entries.
3. Determine the revenues, expense, and net income of Econo Company after the adjusting entries.
4. Determine the effect on Randy Huntsinger, Capital of the adjusting entries.

Adjusting entries and errors

At the end of June, the first month of operations, the following selected data were taken from the financial statements of Beth Cato, an attorney:
Net income for June $ 80,000Total assets at June 30 500,000Total liabilities at June 30 200,000Total owner's equity at June 30 300,000
In preparing the financial statements, adjustments for the following data were overlooked:

a. Supplies used during June, $1,500.
b. Unbilled fees earned at June 30, $18,000.
c. Depreciation of equipment for June, $3,000.
d. Accrued wages at June 30, $1,200.

Instructions

1. Journalize the entries to record the omitted adjustments.
2. Determine the correct amount of net income for June and the total assets, liabilities, and owner's equity at June 30. In addition to indicating the corrected amounts, indicatethe effect of each omitted adjustment by setting up and completing a columnar tablesimilar to the following. Adjustment (a) is presented as an example

Reference no: EM131092396

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