The Adjusting Process

Prob. 3–1A

On July 31, 2014 the following data were accumulated to assist the accountant in
preparing adjusting entries for Atrium Realty:
a. The supplies account balance on July 31 is $6,880. The supplies on hand on July 31
are $2,200.
b. The unearned rent account balance on July 31 is $9,200, representing the receipt of
an advance payment on July 1 of four months' rent from tenants.
c. Wages accrued but not paid at July 31 are $1,850.
d. Fees accrued but unbilled at July 31 are 11,700.
e. Depreciation of office equipment is $3,500.

Instructions
1. Journalize the adjusting entries required at July 31,2014.
2. Briefly explain the difference between adjusting entries and entries that would be
made to correct errors.

Prob. 3–2A
Selected account balances before adjustment for Heartland Realty at August 31,2014,
the end of the current year, are as follows:

Debits Credits

Account receivable $ 80,000

Equipment 150,000
Accumulated Depreciation – Equipment $ 28,000
Prepaid rent 6,000
Supplies 3,000
Wages Payable -
Unearned fees 10,500
Fees earned 410,000
Wages Expense 190,000
Rent Expense -
Depreciation Expense -
Supplies Expense -

Data needed for year-end adjustment are as follows:

a. Unbilled fees at August 31, $9,150.
b. Supplies on hand at August 31, $675.
c. Rent expired, $5,000.
d. Depreciation of equipment during year, $3,300.
e. unearned fees at August 31, $3,000.
f. Wages accrued but not paid at August 31, $3,100.

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Instructions
1. Journalize the six adjusting entries required at August 31, based on the data
presented.
2. What would be the effect on the income statement if adjusting (a) and (f) were
omitted at the end of the year?
3. What would be the effect on the balance sheet if adjustment (a) and (f) were
omitted at the end of the year?
4. What would be the effect on the "Net increase of decrease in cash" on the statement
of cash flows if adjustments (a) and (f) were omitted at the end of the year?

Prob. 3–3A
Electro Repairs & Service, an electronics repair store, prepared the unadjusted trial
balance shown below at the end of its first year of operations.

Electro repairs & services

unadjusted Trial Balance
June 30, 2014

Debit Credit
Balance Balance
Cash 13,800
Accounts receivable 90,000
Supplies 21,600
Equipment 154,800
Account Payable 21,000
Unearned Fees 24,000
Amy Wolf, Capital 162,000
Amy wolf, Drawing 18,000
Fees Earned 393,000
Wages Expense 126,000
Rent Expense 96,000
Utilities Expense 69,000
Miscellaneous Expense 10,800
600,000 600,000

For preparing the adjusting entries, the following data were assembled:
a. Fees earned but unbilled on June 30 were $12,700.
b. Supplies on hand on June 30 were $4,175.
c. Depreciation of equipment was estimated to be $7,400 for the year.
d. The balance in unearned fees represented the June 1 receipt in advance for services
to be provided. Only $14,200 of the services was provided between June 1 and June

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30.
e. Unpaid wages accrued on June 30 were $1,100.

Instructions
1. Journalize the adjusting entries necessary on June 30, 1014.
2. Determine the revenues, expenses, and net income of Electro Service & Repairs
before the adjusting entries.
3. Determine the revenues, expenses, and net income of Electro Service Repairs after
the adjusting entries.
4. Determine the effect the effect if the adjusting entries on Amy Wolf, Capital.

Prob. 3–5A
Dickens Company
Unadjusted Trial Balance
October 31, 2014

Debit Credit
Balances Balances

Cash 7,500
Accounts Receivable 38,400
Prepaid Issuance 7,200
Supplies 1,980
Land 112,500
Building 150,250
Accumulated Depreciation-Building 87,550
Equipment 135,300
Accumulated Depreciation-Equipment 97,950
Account payable 12,150
Unearned Rent 6,750
Monica Baker, Capital 221,000
Monica Drawing 15,000
Fees earned 324,600
Salaries and Wages Expense 193,370
Utilities Expense 42,375
Advertising Expense 22,800
Repairs Expense 17,250
Miscellaneous Expense 6,075

750,000 750,000

Data needed to determine year-end adjustments are as follows:

a. Unexpired insurance at October 31, $5,400.
b. Supplies on hand at October 31, $375.

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c. Depreciation of building for the year, $6,000.
d. Depreciation of equipment for the year, $3000
e. Rent unearned at October 31, $1,350.
f. Accrued salaries and wages at October 31, $2,900.
g. Fees earned but unbilled on October 31, $18,600.

Instruction
1. Journalize the adjusting entries using the following additional accounts: salaries
and wages Payable; rent revenue; insurance expense; depreciation expense-building
depreciation expense-equipment; and supplies expense.
2. Determine the balances of the accounts affected by the adjusting entries, and
prepare an adjusted trial balance.

Prob. 3–1b

On May 31, 2014, the following data were accumulated to assist the accountant in
preparing the adjusting entries for Oceanside Realty:
a. Fees accrued but unbilled at May 31 are $19,750.
b. the supplies account balance on May 31 is $12,300. The supplies on hand at May
31 are $4,150.
c. Wages accrued but not paid at May 31 are $2,700.
d. The unearned rent account balance at May 31 is $9,000, representing the receipt of
an advance payment on May 1 of three months' rent from tenants.
e. Depreciation of office equipment is $3,200.

Instructions
1. Journalize the adjusting entries required at Mat 31, 2014.
2. Briefly explain the difference between adjusting entries and entries that would be
made to correct errors.

Prob. 3–2B : Selected account balances before adjustment for Intuit Realty at
November 30, 2014 the end of the current year, are shown below.

Accounts Receivable $75,000

Equipment 250,000
Accumulated Depreciation-Equipment $ 12,000
Prepaid Rent 12,000
Supplies 3,170
Wages Payables -
Unearned fees 10,000
Fees earned 400,000
Wages Payable 140,000
Rent Expense -

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Depreciation Expense -
Supplies Expense –

Data needed for year-end adjustment are as follows:

a. Supplies on hand at November 30, $550.
b. Depreciation of equipment during year, $1,675.
c. Rent expired during year, $8,500.
d. Wages accrued but not paid at November 30, $2000.
e. Unearned fees at November 30, $4,000
f. Unbilled fees at November 30, $5,380.

Instructions:
1. Journalize the six adjusting entries required at November 30, based on the data
presented.
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

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