Reference no: EM13535172

Adjusting entries

Selected account balances before adjustment for Newhouse Realty at March 31, 2012, the end of the current year, are as follows:

	Debits	Credits
Accounts Receivable	$80,000
Equipment	150,000
Accumulated Depreciation		$28,000
Prepaid Rent	6,000
Supplies	$ 3,000
Wages Payable		-
Unearned Fees		10,500
Fees Earned		410,000
Wages Expense	190,000
Rent Expense	-
Depreciation Expense	-
Supplies Expense	-

Data needed for year-end adjustments are as follows:

a. Unbilled fees at March 31, $13,500.

b. Supplies on hand at March 31, $950.

c. Rent expired, $4,000.

d. Depreciation of equipment during year, $1,500.

e. Unearned fees at March 31, $2,500.

f. Wages accrued but not paid at March 31, $2,200.

Instructions

1. Journalize the six adjusting entries required at March 31, based on the data presented.

2. What would be the effect on the income statement if adjustments (a) and (f) were omitted at the end of the year?

3. What would be the effect on the balance sheet if adjustments (a) and (f) were omitted at the end of the year?

4. What would be the effect on the "Net increase or decrease in cash" on the statement of cash flows if adjustments (a) and (f) were omitted at the end of the year?