Question

Len Kumar started his own consulting firm, Kumar Consulting, on June 1, 2022. The trial balance at June 30 is as follows:

Consulting Trial Balance - June 30, 2022

Debit:
Cash: 6,850
Accounts Receivable:7,000
Supplies: 2,000
Prepaid Insurance:2,880
Equipment: 15,000
Accounts Payable:4,230
Unearned Service Revenue: 5,200

Credit:
Common Stock:22,000
Service Revenue: 8,300
Salaries and Wages Expense:4,000
Rent Expense: 2,000

In addition to those accounts listed on the trial balance, the chart of accounts for Kumar also contains the following accounts: Accumulated Depreciation–Equipment, Salaries and Wages Payable, Depreciation Expense, Insurance Expense, Utilities Expense, and Supplies Expense.

Other data:
1. Supplies on hand at June 30 total720.
2. A utility bill for 180 has not been recorded and will not be paid until next month.
3. The insurance policy is for a year.
4. Services were performed for4,100 of unearned service revenue by the end of the month.
5. Salaries of 1,250 are accrued at June 30.
6. The equipment has a 5-year life with no salvage value and is being depreciated at250 per month for 60 months.
7. Invoices representing 3,900 of services performed by Kumar during the month have not been recorded as of June 30.

a. Prepare the adjusting entries for the month of June.
b. Post the adjusting entries to the ledger accounts. Enter the totals from the trial balance as beginning account balances. (Use T-accounts.)

c. Prepare an adjusted trial balance at June 30, 2022.

Total Trial Balance:45,310

Answer 1

To prepare the adjusting entries for Kumar Consulting, we need to consider various factors such as supplies, utilities, insurance, unearned revenue, salaries, and depreciation. These adjusting entries will ensure that the financial statements reflect the correct balances.

Step-by-step explanation:

To prepare the adjusting entries for the month of June, we need to consider the given data. The adjusting entries will be as follows:

1. Debit Supplies Expense and credit Supplies to record the decrease in supplies on hand to $720.
2. Debit Utilities Expense and credit Utilities Payable to record the utility bill of $180 that is not yet recorded.
3. Debit Prepaid Insurance and credit Insurance Expense to record the expiration of one month of insurance coverage ($2,880/12).
4. Debit Unearned Service Revenue and credit Service Revenue to record the services performed for $4,100 of previously unearned revenue.
5. Debit Salaries and Wages Expense and credit Salaries and Wages Payable to accrue the salaries of $1,250 at the end of the month.
6. Debit Depreciation Expense and credit Accumulated Depreciation–Equipment to record the monthly depreciation expense of $250 for the equipment.
7. Debit Accounts Receivable and credit Service Revenue to record the services performed for $3,900 of unrecorded revenue.