E3-6 Zaragoza Company accumulates the following adjustment data at December 31.

Services performed but not recorded total $1,000.

Supplies of $300 have been used.

Utility expenses of $225 are unpaid.

Services related to unearned service revenue of $260 were performed.

Salaries of $800 are unpaid.

Prepaid insurance totaling $350 has expired.

Instructions

For each of the above items indicate the following.

(a) The type of adjustment (prepaid expense, unearned revenue, accrued revenue, or accrued expense).

(b) The status of accounts before adjustment (overstatement or understatement).

Prepare adjusting entries from selected account data.

(LO 2, 3)

E3-7 The ledger of Passehl Rental Agency on March 31 of the current year includes the selected accounts, shown below, before adjusting entries have been prepared.

Debit Credit

Prepaid Insurance $ 3,600

Supplies 2,800

Equipment 25,000

Accumulated DepreciationEquipment $ 8,400

Notes Payable 20,000

Unearned Rent Revenue 10,200

Rent Revenue 60,000

Interest Expense 0

Salaries and Wages Expense 14,000

An analysis of the accounts shows the following.

The equipment depreciates $400 per month.

One-third of the unearned rent revenue was earned during the quarter.

Interest of $500 is accrued on the notes payable.

Supplies on hand total $750.

Insurance expires at the rate of $300 per month.

Instructions

Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly. Additional accounts are Depreciation Expense, Insurance Expense, Interest Payable, and Supplies Expense.

Prepare adjusting entries.

(LO 2, 3)

E3-8 Meghan Lindh, D.D.S., opened a dental practice on January 1, 2017. During the first month of operations, the following transactions occurred.

Performed services for patients who had dental plan insurance. At January 31, $875 of such services were performed but not yet recorded.

Utility expenses incurred but not paid prior to January 31 totaled $650.

Purchased dental equipment on January 1 for $80,000, paying $20,000 in cash and signing a $60,000, 3-year note payable. The equipment depreciates $400 per month. Interest is $500 per month.

Purchased a one-year malpractice insurance policy on January 1 for $24,000.

Purchased $1,600 of dental supplies. On January 31, determined that $400 of supplies were on hand.

Instructions

Prepare the adjusting entries on January 31. Account titles are Accumulated DepreciationEquipment, Depreciation Expense, Service Revenue, Accounts Receivable, Insurance Expense, Interest Expense, Interest Payable, Prepaid Insurance, Supplies, Supplies Expense, Utilities Expense, and Utilities Payable.

Prepare adjusting entries.

(LO 2, 3)

E3-9 The trial balance for Pioneer Advertising is shown in Illustration 3-3 (page 97). Instead of the adjusting entries shown in the textbook at October 31, assume the following adjustment data.

Supplies on hand at October 31 total $500.

Expired insurance for the month is $120.

Depreciation for the month is $50.

Services related to unearned service revenue in October worth $600 were performed.

Services performed but not recorded at October 31 are $360.

Interest accrued at October 31 is $95.

Accrued salaries at October 31 are $1,625.

Instructions

Prepare the adjusting entries for the items above.

Prepare correct income statement.

(LO 1, 2, 3)

Image Missing

E3-10 The income statement of Montee Co. for the month of July shows net income of $1,400 based on Service Revenue $5,500, Salaries and Wages Expense $2,300, Supplies Expense $1,200, and Utilities Expense $600. In reviewing the statement, you discover the following.

Insurance expired during July of $400 was omitted.

Supplies expense includes $250 of supplies that are still on hand at July 31.

Depreciation on equipment of $150 was omitted.

Accrued but unpaid salaries and wages at July 31 of $300 were not included.

Services performed but unrecorded totaled $650.

Instructions

Prepare a correct income statement for July 2017.

Analyze adjusted data.

(LO 1, 2, 3, 4)

Image Missing

E3-11 A partial adjusted trial balance of Frangesch Company at January 31, 2017, shows the following.

FRANGESCH COMPANY

Adjusted Trial Balance

January 31, 2017

Debit Credit

Supplies $ 850

Prepaid Insurance 2,400

Salaries and Wages Payable $ 920

Unearned Service Revenue 750

Supplies Expense 950

Insurance Expense 400

Salaries and Wages Expense 2,900

Service Revenue 2,000

Instructions

Answer the following questions, assuming the year begins January 1.

(a) If the amount in Supplies Expense is the January 31 adjusting entry, and $1,000 of supplies was purchased in January, what was the balance in Supplies on January 1?

(b) If the amount in Insurance Expense is the January 31 adjusting entry, and the original insurance premium was for one year, what was the total premium and when was the policy purchased?

(c) If $3,800 of salaries was paid in January, what was the balance in Salaries and Wages Payable at December 31, 2016?

Journalize basic transactions and adjusting entries.

(LO 2, 3)