Selected account balances before adjustment for Intuit Realty at November 30, the end of the current year, follow:

	Debits	Credits
Accounts Receivable	$ 75,000
Equipment	250,000
Accumulated Depreciation-Equipment		$12,000
Prepaid Rent	12,000
Supplies	3,170
Wages Payable
Unearned Fees		10,000
Fees Earned		400,000
Wages Expense	140,000
Rent Expense
Depreciation Expense
Supplies Expense

Data needed for year-end adjustments are as follows:

	a. Supplies on hand at November 30, $550.
	b. Depreciation The systematic periodic transfer of the cost of a fixed asset to an expense account during its expected useful life. of equipment during year, $1,675.
	c. Rent expired during year, $8,500.
	d. Wages accrued but not paid at November 30, $2,000.
	e. Unearned fees at November 30, $4,000.
	f. Unbilled fees at November 30, $5,380.

	Required:
1.	Journalize the six adjusting entries required at November 30, based on the data presented. Refer to the Chart of Accounts for exact wording of account titles.
2.	What would be the effect on the income statement if adjustments (b) and (e) were omitted at the end of the year?
3.	What would be the effect on the balance sheet if adjustments (b) and (e) were omitted at the end of the year?
4.	What would be the effect on the Net increase or decrease in cash on the statement of cash flows if adjustments (b) and (e) were omitted at the end of the year?

none

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Chart of Accounts

CHART OF ACCOUNTS

Intuit Realty

General Ledger

	ASSETS
11	Cash
12	Accounts Receivable
13	Supplies
14	Prepaid Rent
15	Land
16	Equipment
17	Accumulated Depreciation-Equipment
19	Accumulated Depreciation-Automobiles

	LIABILITIES
21	Accounts Payable
22	Unearned Fees
23	Wages Payable
24	Taxes Payable

	EQUITY
31	Owner, Capital
32	Owner, Drawing

	REVENUE
41	Fees Earned
42	Rent Revenue

	EXPENSES
51	Advertising Expense
52	Insurance Expense
53	Rent Expense
54	Wages Expense
55	Supplies Expense
56	Utilities Expense
57	Depreciation Expense
59	Miscellaneous Expense

none

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Journal

1. Journalize the six adjusting entries required at November 30, based on the data presented. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 1

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1		Adjusting Entries
2
3
4
5
6
7
8
9
10
11
12
13

Solution

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1		Adjusting Entries
2
3
4
5
6
7
8
9
10
11
12
13

Points:

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Explanation

none

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Final Questions

2. What would be the effect on the income statement if adjustments (b) and (e) were omitted at the end of the year?

	Over/Understated	Amount
Fees earned	selector 1 Understated Overstated No effect
Depreciation expense The portion of the cost of a fixed asset that is recorded as an expense each year of its useful life.	selector 2 Understated Overstated No effect
Net income	selector 3 Understated Overstated No effect

Points:

3. What would be the effect on the balance sheet if adjustments (b) and (e) were omitted at the end of the year?

	Over/Understated	Amount
Accumulated Depreciation The contra asset account credited when recording the depreciation of a fixed asset. -Equipment	selector 1 Understated Overstated No effect
Total assets	selector 2 Understated Overstated No effect
Unearned fees	selector 3 Understated Overstated No effect
Total liabilities	selector 4 Understated Overstated No effect
Owners capital	selector 5 Understated Overstated No effect
Total liabilities and owners equity	selector 6 Understated Overstated No effect

Points:

4. What would be the effect on the Net increase or decrease in cash on the statement of cash flows if adjustments (b) and (e) were omitted at the end of the year? selector 1

Understated

Overstated

No effect

Points:

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Explanation