Milbank Repairs & Service, an electronics repair store, prepared the following unadjusted trial balance at the end of its first year of operations: Milbank Repairs & Service UNADJUSTED TRIAL BALANCE June 30, 2019 ACCOUNT TITLE DEBIT CREDIT 1 Cash 10,140.00 2 Accounts Receivable 67,920.00 3 Supplies 15,710.00 4 Equipment 116,740.00 5 Accounts Payable 15,900.00 6 Unearned Fees 17,920.00 7 Nancy Townes, Capital 119,800.00 8 Nancy Townes, Drawing 13,440.00 9 Fees Earned 295,870.00 10 Wages Expense 94,410.00 11 Rent Expense 71,690.00 12 Utilities Expense 51,490.00 13 Miscellaneous Expense 7,950.00 14 Totals 449,490.00 449,490.00 For preparing the adjusting entries, the following data were assembled: • Fees earned but unbilled on June 30 were $9,440. • Supplies on hand on June 30 were $5,130. • Depreciation of equipment was estimated to be $6,200 for the year. • The balance in unearned fees represented the June 1 receipt in advance for services to be provided. During June, $15,280 of the services were provided. • Unpaid wages accrued on June 30 were $5,230. Required: 1. Journalize the adjusting entries necessary on June 30, 2019. Refer to the Chart of Accounts for exact wording of account titles. 2. Determine the revenues, expenses, and net income of Milbank Repairs & Service before the adjusting entries. 3. Determine the revenues, expenses, and net income of Milbank Repairs & Service after the adjusting entries. 4. Determine the effect of the adjusting entries on Nancy Townes, Capital. Chart of Accounts CHART OF ACCOUNTS Milbank Repairs & Service General Ledger ASSETS 11 Cash 12 Accounts Receivable 13 Supplies 14 Equipment 15 Accumulated Depreciation-Equipment LIABILITIES 21 Accounts Payable 22 Wages Payable 23 Unearned Fees EQUITY 31 Nancy Townes, Capital 32 Nancy Townes, Drawing 33 Dividends REVENUE 41 Fees Earned EXPENSES 51 Wages Expense 52 Rent Expense 53 Supplies Expense 54 Depreciation Expense 56 Utilities Expense 59 Miscellaneous Expense Journal 1. Journalize the adjusting entries necessary on June 30, 2019. PAGE 10 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 Adjusting Entries 2
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
| ACCOUNT TITLE | DEBIT | CREDIT | |
|---|---|---|---|
|
1
|
Cash
|
10,140.00
|
|
|
2
|
Accounts Receivable
|
67,920.00
|
|
|
3
|
Supplies
|
15,710.00
|
|
|
4
|
Equipment
|
116,740.00
|
|
|
5
|
Accounts Payable
|
|
15,900.00
|
|
6
|
Unearned Fees
|
|
17,920.00
|
|
7
|
Nancy Townes, Capital
|
|
119,800.00
|
|
8
|
Nancy Townes, Drawing
|
13,440.00
|
|
|
9
|
Fees Earned
|
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295,870.00
|
|
10
|
Wages Expense
|
94,410.00
|
|
|
11
|
Rent Expense
|
71,690.00
|
|
|
12
|
Utilities Expense
|
51,490.00
|
|
|
13
|
Miscellaneous Expense
|
7,950.00
|
|
|
14
|
Totals
|
449,490.00
|
449,490.00
|
| • | Fees earned but unbilled on June 30 were $9,440. |
| • | Supplies on hand on June 30 were $5,130. |
| • | |
| • | The balance in unearned fees represented the June 1 receipt in advance for services to be provided. During June, $15,280 of the services were provided. |
| • | Unpaid wages accrued on June 30 were $5,230. |
| Required: | |
| 1. | Journalize the adjusting entries necessary on June 30, 2019. Refer to the Chart of Accounts for exact wording of account titles. |
| 2. | Determine the revenues, expenses, and net income of Milbank Repairs & Service before the adjusting entries. |
| 3. | Determine the revenues, expenses, and net income of Milbank Repairs & Service after the adjusting entries. |
| 4. | Determine the effect of the adjusting entries on Nancy Townes, Capital. |
| CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||
| Milbank Repairs & Service | |||||||||||||||||||||||||||||||||||||||||||||||
| General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||
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| DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
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Adjusting Entries
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9
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10
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11
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