Adjusting Entries

Reliable Repairs and Service, an electronics repair store, prepared the following unadjusted trial balance at the end of its first year of operations:

Adjusting Entries

Reliable Repairs and Service, an electronics repair store, prepared the following unadjusted trial balance at the end of its first year of operations:

Reliable Repairs and Service
Unadjusted Trial Balance
April 30, 2018
	Debit Balances		Credit Balances
Cash	13,420
Accounts Receivable	89,130
Supplies	21,480
Equipment	455,220
Accounts Payable			20,940
Unearned Fees			23,630
Common Stock			55,000
Retained Earnings			259,000
Dividends	17,720
Fees Earned			536,940
Wages Expense	124,570
Rent Expense	95,040
Utilities Expense	68,190
Miscellaneous Expense	10,740
	895,510		895,510

For preparing the adjusting entries, the following data were assembled:

Required:

• Fees earned but unbilled on April 30 were $9,720.
• Supplies on hand on April 30 were $7,930.
• Depreciation of equipment was estimated to be $13,420 for the year.
• The balance in unearned fees represented the April 1 receipt in advance for services to be provided. During April $18,670 of the services was provided.
• Unpaid wages accrued on April 30 were $1,720.

1. Journalize the adjusting entries necessary on April 30, 2018.

a.	Accounts Receivable
	Fees Earned
b.	Supplies Expense
	Supplies
c.
d.
e.

Feedback

1. Keep in mind that you will be making an adjusting entry for each of these that affects at least one income statement account (revenue or expense) and one balance sheet account (asset or liability). As you go through each of these, consider both sides of the transaction that results in an adjusting entry and identify related accounts. Remember, four different categories of adjusting entries include prepaid expenses (deferred expenses), unearned revenues (deferred revenues), accrued expenses (accrued liabilities), and accrued revenues (accrued assets) plus the adjustment for depreciation expense.

Learning Objective 2, Learning Objective 3, Learning Objective 4 and Learning Objective 5.

2. Determine the revenues, expenses, and net income of Reliable Repairs and Service before the adjusting entries.

Revenues	$
Expenses
Net income	$

3. Determine the revenues, expenses, and net income of Reliable Repairs and Service after the adjusting entries.

Revenues	$
Expenses
Net income	$

4. Determine the effect of the adjusting entries on Retained Earnings. Retained Earnings by $.

For preparing the adjusting entries, the following data were assembled:

Required:

• Fees earned but unbilled on April 30 were $9,720.
• Supplies on hand on April 30 were $7,930.
• Depreciation of equipment was estimated to be $13,420 for the year.
• The balance in unearned fees represented the April 1 receipt in advance for services to be provided. During April $18,670 of the services was provided.
• Unpaid wages accrued on April 30 were $1,720.

1. Journalize the adjusting entries necessary on April 30, 2018.

a.
b.
c.
d.
e.

Feedback

1. Keep in mind that you will be making an adjusting entry for each of these that affects at least one income statement account (revenue or expense) and one balance sheet account (asset or liability). As you go through each of these, consider both sides of the transaction that results in an adjusting entry and identify related accounts. Remember, four different categories of adjusting entries include prepaid expenses (deferred expenses), unearned revenues (deferred revenues), accrued expenses (accrued liabilities), and accrued revenues (accrued assets) plus the adjustment for depreciation expense.

Learning Objective 2, Learning Objective 3, Learning Objective 4 and Learning Objective 5.

2. Determine the revenues, expenses, and net income of Reliable Repairs and Service before the adjusting entries.

Revenues	$
Expenses
Net income	$

3. Determine the revenues, expenses, and net income of Reliable Repairs and Service after the adjusting entries.

Revenues	$
Expenses
Net income	$

4. Determine the effect of the adjusting entries on Retained Earnings. Retained Earnings by $.