CHAPTER 3 The Adjusting Process
Prob. 3–6A
1. a. Supplies Expense
Supplies 2,750
Supplies used.
2. Total
Net Total
Income Assets = + Equity
Stockholders’Total
Liabilities
2,750
3-20
CHAPTER 3 The Adjusting Process
Prob. 3–1B
1. a. Accounts Receivable 19,750
Fees Earned 19,750
Accrued fees earned.
b. Supplies Expense 8,150
2. Adjusting entries are a planned part of the accounting process to update the
3-21
CHAPTER 3 The Adjusting Process
Prob. 3–2B
1. a. Supplies Expense 2,620
Supplies 2,620
Supplies used ($3,170 – $550).
b. Depreciation Expense 1,675
2. Fees Earned would be understated by $6,000; Depreciation Expense would
3. Accumulated Depreciation—Equipment would be understated by $1,675; total
3-22
CHAPTER 3 The Adjusting Process
Prob. 3–3B
1. a. Supplies Expense 5,820
Supplies 5,820
Supplies used ($7,200 – $1,380).
2. Revenues…………………
…
$305,800
…
…
…
4. The effect of the adjusting entries on Retained Earnings is the difference in
3-23
CHAPTER 3 The Adjusting Process
Prob. 3–4B
2014
Mar. 31 Supplies Expense 4,025
3-24
CHAPTER 3 The Adjusting Process
Prob. 3–5B
1. a. Depreciation Expense—Building 6,400
Accumulated Depreciation—Building 6,400
Building depreciation.
3-25
CHAPTER 3 The Adjusting Process
Prob. 3–5B (Concluded)
2.
Debit Credit
Balances Balances
Cash 10,200
Accounts Payable 3,750
Unearned Rent 300
Salaries and Wages Payable 900
Capital Stock 60,000
Retained Earnings 93,550
July 31, 2014
REECE FINANCIAL SERVICES CO.
Adjusted Trial Balance
3-26
CHAPTER 3 The Adjusting Process
Prob. 3–6B
1. a. Accounts Receivable
Fees Earned 31,900
Accrued fees earned.
2. Total
Net Total Stockholders’
Income Assets = + Equity
Reported amounts $112,500 $650,000 $425,000
Corrections:
31,900
Total
Liabilities
$225,000
3-27
CHAPTER 3 The Adjusting Process
1.
Page 3
Post.
Ref. Debit Credit
2014
July 31 Accounts Receivable 12 1,400
Fees Earned 41 1,400
CONTINUING PROBLEM
Date
JOURNAL
Adjusting Entries
Description
3-28
CHAPTER 3 The Adjusting Process
Continuing Problem (Continued)
2.
Account No. 11
Post.
Item Ref. Debit Debit Credit
2014
July 1 Balance 93,920
13 1 11,620
14 1 10,420
16 2 2,000 12,420
21 2 11,800
22 2 11,000
Account No. 12
Post.
Item Ref. Debit Debit Credit
21 ——
23 2 1,750 1,750
Balance
CreditDate
Account: Cash
700
Account: Accounts Receivable
1,200
620
800
Date Credit
Balance
1,000
3-29
CHAPTER 3 The Adjusting Process
Continuing Problem (Continued)
Account No. 14
Post.
Item Ref. Debit Credit Debit Credit
2014
July 1 Balance 9170
Account No. 15
Post.
Item Ref. Debit Credit Debit Credit
Account No. 17
Post.
Item Ref. Debit Credit Debit Credit
2014
Account No. 18
Post.
Item Ref. Debit Credit Debit Credit
Account No. 21
Post.
Item Ref. Debit Credit Debit Credit
2014
July 1 Balance 9250
Account No. 22
Post.
Item Ref. Debit Credit Debit Credit
2014
Balance
Date
Balance
Balance
Balance
Date
Account: Office Equipment
Date
Account:
Balance
Account: Accounts Payable
Date
Balance
Account: Wages Payable
Date
Accumulated Depreciation—Office Equipment
Account: Supplies
Account: Prepaid Insurance
Date
3-30
CHAPTER 3 The Adjusting Process
Continuing Problem (Continued)
Account No. 23
Post.
Item Ref. Debit Credit Debit Credit
2014
Account No. 31
Post.
Item Ref. Debit Credit Debit Credit
2014
Account No. 33
Post.
Item Ref. Debit Credit Debit Credit
2014
Account No. 34
Post.
Item Ref. Debit Credit Debit Credit
(This account is not used in Chapter 3.)
Account No. 41
Post.
Item Ref. Debit Credit Debit Credit
2014
30 2 1,500 13,200
31 2 3,000 16,200
Date
Date
Account: Dividends
Account: Income Summary
Account: Unearned Revenue
Account: Capital Stock
Balance
Balance
Balance
Date
Account: Fees Earned
Balance
Date
Balance
Date
3-31
CHAPTER 3 The Adjusting Process
Continuing Problem (Continued)
Account No. 50
Post.
Item Ref. Debit Credit Debit Credit
2014
Account No. 51
Post.
Item Ref. Debit Credit Debit Credit
2014
Account No. 52
Post.
Item Ref. Debit Credit Debit Credit
2014
Account No. 53
Post.
Item Ref. Debit Credit Debit Credit
2014
Account No. 54
Post.
Item Ref. Debit Credit Debit Credit
2014
Balance
Date
Balance
Balance
Balance
Date
Account: Utilities Expense
Date
Account:
Date
Balance
Account: Wages Expense
Music Expense
Account: Office Rent Expense
Account: Equipment Rent Expense
Date
3-32
CHAPTER 3 The Adjusting Process
Continuing Problem (Continued)
Account No. 55
Post.
Item Ref. Debit Credit Debit Credit
2014
Account No. 56
Post.
Item Ref. Debit Credit Debit Credit
2014
Account No. 57
Post.
Item Ref. Debit Credit Debit Credit
2014
Account No. 58
Post.
Item Ref. Debit Credit Debit Credit
2014
Account No. 59
Post.
Item Ref. Debit Credit Debit Credit
2014
Date
Account: Insurance Expense
Account: Depreciation Expense
Date
Balance
Balance
Balance
Date
Account: Miscellaneous Expense
Balance
Account: Advertising Expense
Date
Balance
Account: Supplies Expense
Date
3-33
CHAPTER 3 The Adjusting Process
Continuing Problem (Concluded)
3.
Debit Credit
Balances Balances
Cash 9,945
Accounts Receivable 4,150
Unearned Revenue 3,600
Capital Stock 9,000
Dividends 1,750
PS MUSIC
Adjusted Trial Balance
July 31, 2014
3-34
CHAPTER 3 The Adjusting Process
CP 3–1
It is acceptable for Daryl to prepare the financial statements for Squid Realty Co. on
an accrual basis. The revision of the financial statements to include the accrual of
CP 3–2
The cost of the warranty repairs, $1,650, should be recognized as an expense of
CASES & PROJECTS
3-35
CP 3–3
Revenue is normally recorded when the services are provided or when the
goods are delivered (title passes) to the buyer. By waiting until after the services
are provided, the expenses of providing the services can be more accurately
(1) The receipt of revenue from customers in advance of a flight represents
(2) At the end of the airline’s accounting period, it would have adjusting entries
related to such items as the following:
●Accrued wages for employees
3-36
CHAPTER 3 The Adjusting Process
CP 3–4
a. There are several indications that adjusting entries were not recorded before
the financial statements were prepared, including:
b. Likely accounts requiring adjustment include:
1. Accumulated Depreciation—Truck for depreciation expense.
CP 3–5
Note to Instructors: The purpose of this activity is to familiarize students with
behaviors that are common in codes of conduct. In addition, this activity
addresses an actual ethical dilemma for students related to doing their
3-37