Adjusting Entries

Adjusting entries

Selected account balances before adjustment for Heartland Realty at August 31, 2014, the end of the current year, are as follows:

 

Debits Credits
Accounts 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 adjustments 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.

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 adjustments (a) and (f) were omitted at the end of the year?

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

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