Reference no: EM131763840
Mitakis Inc., a small service repair company, keeps its records without the help of an accountant. After much effort, an outside accountant prepared the following unadjusted trial balance as at the end of the company's fiscal year, December 31, 2015:
| Account Titles |
Debit |
Credit |
| Cash |
$31,300 |
|
| Trade receivables |
13,625 |
|
| Supplies inventory |
2,800 |
|
| Prepaid insurance |
1,875 |
|
| Equipment (five-year life, no residual value) |
54,000 |
|
| Accumulated depreciation, equipment |
|
$24,000 |
| Other assets |
8,100 |
|
| Trade payables |
|
7,000 |
| Note payable (three years; 10% each December 31) |
|
17,000 |
| Contributed capital (7,000 shares) |
|
18,800 |
| Retained earnings |
|
11,800 |
| Service revenue |
|
63,000 |
| Other expenses, excluding income tax |
29,900 |
|
| Totals |
141,600 |
$141,600
|
Data not yet recorded at December 31, 2015, include the following:
a. Depreciation expense for 2015, $6,000.
b. Insurance expired during 2015, $750.
c. Wages earned by employees not yet paid on December 31, 2015, $2,600.
d. Supplies inventory on December 31, 2015, reflecting $900 remaining on hand.
e. Income tax expense, $4,450.
Show the effects of the adjusting entries on net earnings and cash. (If there is no cash flow effect, select "None". Enter any decreases to account balances with a minus sign.)