CHAPTER 3 The Adjusting Process
3-19
Prob. 3–5A (Concluded)
2.
Debit Credit
Balances Balances
Cash
7,500
Accounts Receivable 49,730
Accounts Payable 12,150
Unearned Rent 1,550
Salaries and Wages Payable 3,200
Marlene Rowland, Capital 221,000
Marlene Rowland, Drawing 15,000
August 31, 2016
ROWLAND COMPANY
Adjusted Trial Balance
CHAPTER 3 The Adjusting Process
3-20
Prob. 3–6A
1. a. Supplies Expense
Supplies 2,750
Supplies used.
1,800
1,400
2. Total
Net Total Owner’s
Income Assets = + Equity
Reported amounts $120,000 $750,000 $450,000
Corrections:
Adjustment (a) –2,750 –2,750 –2,750
Total
Liabilities
$300,000
0
2,750
CHAPTER 3 The Adjusting Process
3-21
Prob. 3–1B
1. a. Accounts Receivable 19,750
Fees Earned 19,750
Accrued fees earned.
b. Supplies Expense 8,150
c. Wages Expense 2,700
Wages Payable 2,700
Accrued wages.
e. Depreciation Expense 3,200
Accumulated Depreciation—Equipment 3,200
Depreciation expense.
2. Adjusting entries are a planned part of the accounting process to update the
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
Accumulated Depreciation—Equipment 1,675
Depreciation for year.
2. Fees Earned would be understated by $6,000; Depreciation Expense would
3. Accumulated Depreciation—Equipment would be understated by $1,675; total
assets would be overstated by $1,675; Unearned Fees would be overstated by
3-22
CHAPTER 3 The Adjusting Process
3-23
Prob. 3–3B
1. a. Supplies Expense 5,820
Supplies 5,820
Supplies used ($7,200 – $1,380).
b. Accounts Receivable 3,900
d. Wages Expense 2,475
Wages Payable 2,475
Accrued wages.
2.
Revenues……………………
$305,800
Expenses……………………
261,800 ($157,800 + $55,000 + $42,000 + $7,000)
Revenues……………………
Expenses……………………
4. The effect of the adjusting entries on Diana Keck, Capital is the difference
CHAPTER 3 The Adjusting Process
3-24
Prob. 3–4B
2016
Mar. 31 Supplies Expense 4,025
Supplies 4,025
Supplies used ($6,200 – $2,175).
31 Insurance Expense 7,850
31
Depreciation Expense—Trucks
5,000
Accumulated Depreciation—Trucks 5,000
Depreciation ($17,000 – $12,000).
31 Utilities Expense 1,830
Accounts Payable 1,830
Accrued utilities expense
CHAPTER 3 The Adjusting Process
3-25
Prob. 3–5B
1. a.
Depreciation Expense—Building
6,400
Accumulated Depreciation—Building 6,400
Building depreciation.
b. Depreciation Expense—Equipment 2,800
Accumulated Depreciation—Equipment 2,800
Equipment depreciation.
Accrued salaries and wages.
e. Accounts Receivable 10,200
Fees Earned 10,200
Accrued fees earned.
Supplies used ($1,725 – $615).
Rent revenue earned ($3,600 – $300).
CHAPTER 3 The Adjusting Process
3-26
Prob. 3–5B (Concluded)
2.
Debit Credit
Balances Balances
Cash 10,200
Accounts Receivable 44,950
Accounts Payable 3,750
Unearned Rent 300
Salaries and Wages Payable 900
Joni Reece, Capital 153,550
Joni Reece, Drawing 8,000
Fees Earned 168,800
Rent Revenue 3,300
Salaries and Wages Expense 57,750
Utilities Expense 14,100
Advertising Expense 7,500
July 31, 2016
REECE FINANCIAL SERVICES CO.
Adjusted Trial Balance
CHAPTER 3 The Adjusting Process
3-27
Prob. 3–6B
1. a. Accounts Receivable
Fees Earned 31,900
Accrued fees earned.
b. Depreciation Expense
3,000
5,200
2. Total
Net Total Owner’s
Income Assets = + Equity
Reported amounts $112,500 $650,000 $425,000
Corrections:
31,900
7,500
Total
Liabilities
$225,000
CHAPTER 3 The Adjusting Process
3-28
1.
Page 3
Post.
Ref. Debit Credit
2016
July 31 Accounts Receivable 12 1,400
Fees Earned 41 1,400
Accrued fees earned (115 hrs. –
80 hrs.) × $40 = $1,400.
Supplies used ($1,020 – $275).
Insurance expired ($2,700 ÷
12 months) = $225 per month.
31 Depreciation Expense 58 50
Accum. Depr.—Office Equipment 18 50
Office equipment depreciation.
Fees earned ($7,200 ÷ 2 months).
Accrued wages.
CONTINUING PROBLEM
Date
JOURNAL
Adjusting Entries
Description
CHAPTER 3 The Adjusting Process
3-29
Continuing Problem (Continued)
2.
Account No. 11
Post.
Item Ref. Debit Debit Credit
2016
250
900
200
1,750
2,700
13 111,620
14 110,420
16 22,000 12,420
21 211,800
800
915
1,400
1,200
Account No. 12
Post.
Item Ref. Debit Debit Credit
2016
July 1 Balance 1,000
2 1 — —
23 21,750 1,750
Balance
CreditDate
Account: Cash
700
Account: Accounts Receivable
1,200
620
Date Credit
Balance
1,000
CHAPTER 3 The Adjusting Process
3-30
Continuing Problem (Continued)
Account No. 14
Post.
Item Ref. Debit Credit Debit Credit
2016
July 1 Balance 170
Account No. 15
Post.
Item Ref. Debit Credit Debit Credit
2016
Account No. 17
Post.
Item Ref. Debit Credit Debit Credit
2016
July 5 1 7,500 7,500
Account No. 18
Post.
Item Ref. Debit Credit Debit Credit
2016
Account No. 21
Post.
Item Ref. Debit Credit Debit Credit
2016
July 1 Balance 250
Account No. 22
Post.
Item Ref. Debit Credit Debit Credit
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
CHAPTER 3 The Adjusting Process
Continuing Problem (Continued)
Account No. 23
Post.
Item Ref. Debit Credit Debit Credit
Account No. 31
Post.
Item Ref. Debit Credit Debit Credit
2016
Account No. 32
Post.
Item Ref. Debit Credit Debit Credit
2016
July 1 Balance 500
Account No. 41
Post.
Item Ref. Debit Credit Debit Credit
2016
July 1 Balance 6,200
Account: Unearned Revenue
Account: Peyton Smith, Capital
Balance
Balance
Date
Date
Account: Peyton Smith, Drawing
Balance
Date
Account: Fees Earned
Balance
Date
3-31
CHAPTER 3 The Adjusting Process
3-32
Continuing Problem (Continued)
Account No. 50
Post.
Item Ref. Debit Credit Debit Credit
2016
July 1 Balance 400
Account No. 51
Post.
Item Ref. Debit Credit Debit Credit
2016
Account No. 52
Post.
Item Ref. Debit Credit Debit Credit
2016
Account No. 53
Post.
Item Ref. Debit Credit Debit Credit
2016
Account No. 54
Post.
Item Ref. Debit Credit Debit Credit
2016
July 1 Balance 1,590
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
CHAPTER 3 The Adjusting Process
3-33
Continuing Problem (Continued)
Account No. 55
Post.
Item Ref. Debit Credit Debit Credit
Account No. 56
Post.
Item Ref. Debit Credit Debit Credit
2016
Account No. 57
Post.
Item Ref. Debit Credit Debit Credit
2016
July 31 Adjusting 3 225 225
Account No. 58
Post.
Item Ref. Debit Credit Debit Credit
Account: Insurance Expense
Account: Depreciation Expense
Date
Balance
Balance
Date
Balance
Account: Advertising Expense
Date
Balance
Account: Supplies Expense
Date
CHAPTER 3 The Adjusting Process
3-34
Continuing Problem (Concluded)
3.
Debit Credit
Balances Balances
Cash 9,945
Accounts Receivable 4,150
Supplies 275
Fees Earned 21,200
Music Expense 3,610
Wages Expense 2,940
Office Rent Expense 2,550
PS MUSIC
Adjusted Trial Balance
July 31, 2016
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
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
measured and matched against the related revenues. Also, at this point, the
provider of the services has a right to demand payment for the services if
payment hasn’t already been received.
Note to Instructors: The following points might also be worth discussing:
(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
CASES & PROJECTS
3-36
CP 3–3
a. There are several indications that adjusting entries were not recorded before
the financial statements were prepared, including:
1. All expenses on the income statement are identified as “paid” items and
not as “expenses.”
b. Likely accounts requiring adjustment include:
1. Accumulated Depreciation—Truck for depreciation expense.
3. Insurance (paid) expense for unexpired insurance.
5. Utilities accrued.
CP 3–4
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
homework. Consider asking students to look up your school’s Student Code
of Conduct and discuss its implications for the behaviors described in this case.
An excerpt from one such Honor Code is shown below.
Students must share the responsibility for creating and maintaining an atmosphere
of honesty and integrity. Students should be aware that personal experience in
completing assigned work is essential to learning. Permitting others to prepare their