menu
bartleby
search
close search
Hit Return to see all results
close solutoin list

Adjusting entries and errors At the end of August, the first month of operations, the following selected data were taken from the financial statements of Tucker Jacobs, an attorney: In preparing the financial statements, adjustments for the following data were overlooked: Unbilled fees earned at August 31, $31,900. Depreciation of equipment for August, $7,500. Accrued wages at August 31, $5,200. Supplies used during August, $3,000. Instructions 1. Journalize the entries to record the omitted adjustments. 2. Determine the correct amount of net income for August and the total assets, liabilities, and stockholders’ equity at August 31. In addition to indicating the corrected amounts, indicate the effect of each omitted adjustment by setting up and completing a columnar table similar to the following. The first adjustment is presented as an example.

BuyFindarrow_forward

Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663

Solutions

Chapter
Section
BuyFindarrow_forward

Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663
Chapter 3, Problem 6PB
Textbook Problem
58 views

Adjusting entries and errors

At the end of August, the first month of operations, the following selected data were taken from the financial statements of Tucker Jacobs, an attorney:

Chapter 3, Problem 6PB, Adjusting entries and errors At the end of August, the first month of operations, the following , example  1

In preparing the financial statements, adjustments for the following data were overlooked:

  • Unbilled fees earned at August 31, $31,900.
  • Depreciation of equipment for August, $7,500.
  • Accrued wages at August 31, $5,200.
  • Supplies used during August, $3,000.

Instructions

  1. 1. Journalize the entries to record the omitted adjustments.
  2. 2. Determine the correct amount of net income for August and the total assets, liabilities, and stockholders’ equity at August 31. In addition to indicating the corrected amounts, indicate the effect of each omitted adjustment by setting up and completing a columnar table similar to the following. The first adjustment is presented as an example.

Chapter 3, Problem 6PB, Adjusting entries and errors At the end of August, the first month of operations, the following , example  2

(1)

To determine

Prepare the adjusting entries in the books of Company TJ at the end of the year.

Explanation of Solution

Adjusting entries:

Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle.  All adjusting entries affect at least one income statement account (revenue or expense), and one balance sheet account (asset or liability).

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

  • Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.
  • Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

An adjusting entry for fees earned:

In this case, Company TJ recognized the fees revenue at the end of the year. So, the necessary adjusting entry that the Company TJ should record to recognize the accrued fees is as follows:

DateDescription

Post

Ref.

Debit

($)

Credit ($)
August31Accounts receivable  31,900 
         Fees earned  31,900
 (To record the fees earned at the end of the year)   

Table (1)

  • • Account receivable is an asset, and it increased the value of asset by $31,900, hence debit the accounts receivable for $31,900. 
  • • Fees earned increased the value of stockholders’ equity by $31,900; hence credit the fees earned for $31,900.

An adjusting entry for depreciation expenses-Equipment:

In this case, Company TJ recognized the depreciation expenses on equipment at the end of the year. So, the necessary adjusting entry that the Company TJ should record to recognize the accrued expense is as follows:

DateDescription

Post

Ref.

Debit ($)Credit ($)
August31Depreciation expenses –Equipment  7,500 
         Accumulated depreciation-Equipment  7,500
 (To record the depreciation expenses incurred at the end of the year)   

Table (2)

  • • Depreciation expense decreased the value of stockholders’ equity by $7,500; hence debit the depreciation expenses for $7,500...

(2)

To determine

Determine the correct amount of net income for August 31, and the total assets, liabilities and stockholders’ equity of Company TJ.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Chapter 3 Solutions

Financial And Managerial Accounting
Show all chapter solutions
add
Ch. 3 - Accounts requiring adjustment Indicate with a Yes...Ch. 3 - Type of adjustment Classify the following items as...Ch. 3 - Adjustment for accrued revenues At the end of the...Ch. 3 - Adjustment for accrued expense Prospect Realty Co....Ch. 3 - Adjustment for unearned revenue On June 1, 20Y2,...Ch. 3 - Adjustment for prepaid expense The prepaid...Ch. 3 - Adjustment for depreciation The estimated amount...Ch. 3 - Effect of omitting adjustments For the year ending...Ch. 3 - Effect of errors on adjusted trial balance For...Ch. 3 - Vertical analysis Two income statements for Cornea...Ch. 3 - Classifying types of adjustments Classify the...Ch. 3 - Classifying adjusting entries The following...Ch. 3 - Adjusting entry for accrued fees At the end of the...Ch. 3 - Effect of omitting adjusting entry Paradise Realty...Ch. 3 - Adjusting entries for accrued salaries Paradise...Ch. 3 - Determining wages paid The wages payable and wages...Ch. 3 - Effect of omitting adjusting entry Accrued...Ch. 3 - Effect of omitting adjusting entry When preparing...Ch. 3 - Adjusting entries for unearned fees The balance in...Ch. 3 - Effect of omitting adjusting entry At the end of...Ch. 3 - Adjusting entry for supplies The balance in the...Ch. 3 - Determining supplies purchased The supplies and...Ch. 3 - Effect of omitting adjusting entry At March 31,...Ch. 3 - Adjusting entries for prepaid insurance The...Ch. 3 - Adjusting entries for prepaid insurance The...Ch. 3 - Adjusting entries for unearned and accrued fees...Ch. 3 - Adjusting entries for prepaid and accrued taxes...Ch. 3 - Adjustment for depreciation The estimated amount...Ch. 3 - Determining fixed assets book value The balance in...Ch. 3 - Book value of fixed assets In a recent balance...Ch. 3 - Effects of errors on financial statements For a...Ch. 3 - Effects of errors on financial statements For a...Ch. 3 - Effects of errors on financial statements The...Ch. 3 - Effects of errors on financial statements If the...Ch. 3 - Adjusting entries for depreciation; effect of...Ch. 3 - Adjusting entries from trial balances The...Ch. 3 - Adjusting entries from trial balances The...Ch. 3 - Adjusting entries On March 31, the following data...Ch. 3 - Adjusting entries Selected account balances before...Ch. 3 - Adjusting entries Trident Repairs Service, an...Ch. 3 - Adjusting entries Good Note Company specializes in...Ch. 3 - Adjusting entries and adjusted trial balances...Ch. 3 - Adjusting entries and errors At the end of April,...Ch. 3 - Adjusting entries On May 31, the following data...Ch. 3 - Adjusting entries Selected account balances before...Ch. 3 - Adjusting entries Crazy Mountain Outfitters Co.,...Ch. 3 - Adjusting entries The Signage Company specializes...Ch. 3 - Adjusting entries and adjusted trial balances...Ch. 3 - Adjusting entries and errors At the end of August,...Ch. 3 - The unadjusted trial balance that you prepared for...Ch. 3 - Analyze Amazon.com Amazon.com, Inc. (AMZN) is the...Ch. 3 - Analyze Pandora Media Pandora Media, Inc. (P)...Ch. 3 - Analyze World Wrestling Entertainment World...Ch. 3 - Analyze Chipotle Mexican Grill Chipotle Mexican...Ch. 3 - Analyze Nike The following data are taken from...Ch. 3 - Analyze and Compare ATT and Verizon Communications...Ch. 3 - Ethics in Action Chris P. Bacon is the chief...Ch. 3 - Loan application Daryl Kirby opened Squid Realty...Ch. 3 - Communication Delta Air Lines is a major passenger...Ch. 3 - Adjustments and financial statements Several years...

Additional Business Textbook Solutions

Find more solutions based on key concepts
Show solutions add
What is a loan amortization schedule, and what are some ways these schedules are used?

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

What does XBRL stand for?

Accounting Information Systems

In theory, market risk should be the only relevant risk. However, companies focus as much on stand-alone risk a...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)