CH 3: Adjustment Entries

Problem - 01 Tony Masasi started his own consulting firm, Masasi Company, on June 1, 2010. The trial balance at June 30 is shown below. MASASI COMPANY ri!l "!l!n#e $une 30% &010 A##ount Number 'ebit Credit 101 Cash !,1"0 112 #ccounts $ecei%able &,000 12& 'upplies 2,000 130 (repaid )nsurance 3,000 1"! *ffice +,uipment 1",000 201 #ccounts (ayable -,"00 20. /nearned 'er%ice $e%enue -,000 301 T. Masasi, Capital 21,!"0 -00 'er%ice $e%enue !,.00 !2& 'alaries +0pense -,000 !2. $ent +0pense 1,000 31,1"0 31,1"0 )n addition to those accounts listed on the trial balance, the chart of accounts for Masasi Company also contains the following accounts and account numbers2 3o. 1"1 #ccumulated 4epreciation5*ffice +,uipment, 3o. 212 'alaries (ayable, 3o. 2-- /tilities (ayable, 3o. &31 'upplies +0pense, 3o. !11 4epreciation +0pense, 3o. !22 )nsurance +0pense, and 3o. !32/tilities +0pense. Ot(er d!t!: 1. 'upplies on hand at June 30 are &00. 2. # utility bill for 1"0 has not been recorded and will not be paid until ne0t month. 3. The insurance policy is for a year. -. 2,"00 of unearned ser%ice re%enue has been earned at the end of the month. ". 'alaries of 2,000 are accrued at June 30. &. The office e,uipment has a "6year life with no sal%age %alue. )t is being depreciated at 2"0 per month for &0 months. !. )n%oices representing 1,000 of ser%ices performed during the month ha%e not been recorded as of June 30. Instru#tions 7a8 (repare the ad9usting entries for the month of June. /se J3 as the page number for your 9ournal.

Problem 0& 3eosho $i%er $esort opened for business on June 1 with eight air6conditioned units. )ts trial balance before ad9ustment on #ugust 31 is as follows. NEOSHO )I*E) )ESO) ri!l "!l!n#e Au+ust 31% &010 A##ount Number 'ebit Credit 101 Cash 1.,&00 12& 'upplies 3,300

.,-00 2!3,.00 2!3,.00 )n addition to those accounts listed on the trial balance, the chart of accounts for 3eosho $i%er $esort also contains the following accounts and account numbers2 3o. 112 #ccounts $ecei%able, 3o. 1-- #ccumulated 4epreciation5Cottages, 3o. 1"0 #ccumulated 4epreciation5;urniture, 3o. 212 'alaries (ayable,3o. 230 )nterest (ayable,3o. &20 4epreciation +0pense5Cottages,3o.&21 4epreciation +0pense5;urniture, 3o. &31 'upplies +0pense, 3o. !11 )nterest +0pense, and 3o. !22 )nsurance +0pense. Ot(er d!t!: 1. )nsurance e0pires at the rate of -00 per month. 2. # count on #ugust 31 shows &00 of supplies on hand. 3. #nnual depreciation is &,000 on cottages and 2,-00 on furniture. -. /nearned rent re%enue of -,100 was earned prior to #ugust 31. ". 'alaries of -00 were unpaid at #ugust 31. &. $entals of 1,000 were due from tenants at #ugust 31. 7/se #ccounts $ecei%able.8 !. The mortgage interest rate is .= per year. 7The mortgage was ta>en out on #ugust 1.8 Instru#tions 7a8 Journali?e the ad9usting entries on #ugust 31 for the 36month period June 1@#ugust 31.

130 1-0 1-3 1-. 201 20. 2!" 301 30& -2. &22 !2& !32

(repaid )nsurance :and Cottages ;urniture #ccounts (ayable /nearned $ent $e%enue Mortgage (ayable (. <arder, Capital (. <arder, 4rawing $ent $e%enue $epair +0pense 'alaries +0pense /tilities +0pense

&,000 2",000 12",000 2&,000 &,"00 !,-00 10,000 100,000 ",000 10,000 3,&00 "1,000

Problem 03 Aen <am started his own consulting firm, <ambone Consulting, on May 1, 2010. The trial balance at May 31 is as follows. HAM"ONE CONS,- IN. ri!l "!l!n#e M!/ 31% &010 A##ount Number 'ebit Credit 101 Cash ",!00 112 #ccounts $ecei%able &,000 12& 'upplies 1,.00 130 (repaid )nsurance 3,&00 1-. *ffice ;urniture 10,200 201 #ccounts (ayable -,"00 20. /nearned 'er%ice $e%enue 2,000 301 A. <am, Capital 1!,!00

.00 31,!00 31,!00 )n addition to those accounts listed on the trial balance, the chart of accounts for <ambone Consulting also contains the following accounts and account numbers2 3o. 1"0 #ccumulated 4epreciation5*ffice ;urniture, 3o. 212 'alaries (ayable, 3o. 22. Tra%el (ayable, 3o. &31 'upplies +0pense, 3o. !1! 4epreciation +0pense, 3o. !22 )nsurance +0pense, and 3o. !3& Tra%el +0pense. *ther data2 1. .00 of supplies has been used during the month. 2. Tra%el e0pense incurred but not paid on May 31, 2010, 2"0. 3. The insurance policy is for 2 years. -. -00 of the balance in the unearned ser%ice re%enue account remains unearned at the end of the month. ". May 31 is a Bednesday, and employees are paid on ;ridays. <ambone Consulting has two employees, who are paid 100 each for a "6day wor> wee>. &. The office furniture has a "6year life with no sal%age %alue. )t is being depreciated at 1!0 per month for &0 months. !. )n%oices representing 1,200 of ser%ices performed during the month ha%e not been recorded as of May 31. Instru#tions 7a8 (repare the ad9usting entries for the month of May. /se J- as the page number for your 9ournal.

-00 !2& !2.

'er%ice $e%enue 'alaries +0pense $ent +0pense

!,"00 3,-00

Problem - 00 The Mound Ciew Motel opened for business on May 1, 2010. )ts trial balance before ad9ustment on May 31 is as follows. MO,N' *IE1 MO Eri!l "!l!n#e M!/ 31% &010 A##ount Number 'ebit Credit 101 Cash 3,"00 12& 'upplies 2,200 130 (repaid )nsurance 2,210 1-0 :and 12,000 1-1 :odge &0,000 1-. ;urniture 1",000 201 #ccounts (ayable -,100 20. /nearned $ent $e%enue 3,300 2!" Mortgage (ayable 3",000 301 Ae%in <enry, Capital -&,310 -2. $ent $e%enue 10,300 &10 #d%ertising +0pense &00 !2& 'alaries +0pense 3,300 !32 /tilities +0pense .00 ..,!10 ..,!10 )n addition to those accounts listed on the trial balance, the chart of accounts for Mound Ciew Motel also contains the following accounts and account numbers2 3o. 1-2 #ccumulated 4epreciation5:odge, 3o. 1"0 #ccumulated 4epreciation5;urniture, 3o. 212 'alaries (ayable,3o. 230 )nterest (ayable,3o. &1. 4epreciation +0pense5:odge,3o.

&21 4epreciation +0pense5;urniture, 3o. &31 'upplies +0pense, 3o. !11 )nterest +0pense, and 3o. !22 )nsurance +0pense. Ot(er d!t!: 1. (repaid insurance is a 16year policy starting May 1, 2010. 2. # count of supplies shows !"0 of unused supplies on May 31. 3. #nnual depreciation is 3,000 on the lodge and 2,!00 on furniture. -. The mortgage interest rate is 12=. 7The mortgage was ta>en out on May 1.8 ". Two6thirds of the unearned rent re%enue has been earned. &. 'alaries of !"0 are accrued and unpaid at May 31. Instru#tions 7a8 Journali?e the ad9usting entries on May 31.