Question

bank 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, Debit Credit Balances Balances Cash 14,790 Accounts Receivable 98,220 Supplies 23,670 Equipment 554,610 Accounts Payable 23,080 Unearned Fees 26,030 Nancy Townes, Capital 399,000 Nancy Townes, Drawing19,530 Fees Earned591,680 Wages Expense137,270 Rent Expense 104,730 Utilities Expense 75,140 Miscellaneous Expense 11,830 1,039,790 1,039,790 For preparing the adjusting entries, the following data were assembled: Fees earned but unbilled on June 30 were $10,710 Supplies on hand on June 30 were $8,740 Depreciation of equipment was estimated to be $ 14,700 the year The balance in unearned fees represented the June 1 receipt advance for services to be providedDuring June, $20,560 of the services were provided Unpaid wages accrued on June 30 were $1,890.

Answer 1

To prepare the adjusting entries, we need to consider the additional data given:

Fees earned but unbilled on June 30 were $10,710. This is revenue that has been earned but not yet billed to customers, so we need to recognize it by making the following adjusting entry:

Accounts receivable 10,710

Fees earned 10,710

Supplies on hand on June 30 were $8,740. This represents the cost of supplies that have been used up during the year, so we need to recognize the expense by making the following adjusting entry:

Supplies expense 14,930

Supplies 8,740

The Supplies expense is calculated as follows:

Supplies expense = Beginning supplies + Purchases - Ending supplies

= 23,670 + Purchases - 8,740

= 14,930 (Purchases are not given in the information provided.)

Depreciation of equipment was estimated to be $14,700 for the year. Depreciation is the process of allocating the cost of a long-term asset over its useful life. We need to recognize the expense by making the following adjusting entry:

Depreciation expense 14,700

Accumulated depreciation 14,700

The balance in unearned fees represented the June 1 receipt advance for services to be provided. During June, $20,560 of the services were provided. This means that $5,470 (26,030 - 20,560) of the advance has not yet been earned, so we need to recognize this liability by making the following adjusting entry:

Unearned fees 5,470

Fees earned 5,470

Unpaid wages accrued on June 30 were $1,890. This represents the wages that have been earned by employees but not yet paid, so we need to recognize the liability by making the following adjusting entry:

Wages expense 1,890

Wages payable 1,890

After making these adjusting entries, we can prepare the adjusted trial balance:

Milbank Repairs & Service Adjusted Trial Balance June 30, Debit Credit Balances Balances Cash 14,790 Accounts Receivable 109,930 Supplies 14,930 Equipment 554,610 Accumulated Depreciation 14,700 Accounts Payable 23,080 Unearned Fees 20,560 Wages Payable 1,890 Nancy Townes, Capital 399,000 Nancy Townes, Drawing19,530 Fees Earned607,850 Wages Expense139,160 Rent Expense 104,730 Utilities Expense 75,140 Supplies Expense 14,930 Depreciation Expense 14,700 Miscellaneous Expense 11,830 1,039,790 1,039,790

The adjusted trial balance confirms that the total debits equal the total credits, which means that the accounting equation is in balance.

Explanation: