Question

PROBLEM 3-5A Greco Service Co., which specializes in appliance repair services, is owned and op- erated by Curtis Loomis. Greco Service Co.'s accounting clerk prepared the follow- ing trial balance at December 31, 2006: Adjusting entries and adjusted trial balances Objectives 3, 4 Greco Service Co Trial Balance December 31, 2006 4,200 20,600 6,000 2. Total of Debit Column: Supplies $552,520 Land 100,000 161,500 75,700 80,100 7,500 Unearned Rent 7,200 157,100 Curtis Loomis, Drawing.. 5,000 Fees Earned 257,200 Salaries and Wages Expense . ...- 101,800 28,200 15,000 Advertising Expense···· 12,100 4,050 540,000 The data needed to determine year-end adjustments are as follows: a. Depreciation of building for the year, $3,600. b. Depreciation of equipment for the year, $2,400. c. Accrued salaries and wages at December 31, $2,170. c03 101-138.xd 11/10/03 8:09 PM Page 131 Chapter3 The Matching Concept and the Adjusting Process 131 d. Unexpired insurance at December 31, $3,500. e. Fees earned bu unbilled on December 3, $4,350. f. Supplies on hand at December 31, $375. g. Rent unearned at December 31, $2,800. Instructions 1. Journalize the adjusting entries. Add additional accounts as needed. 2. Determine the balances of the accounts affected by the adjusting entries and pre- pare an adjusted trial balance

Answer 1

	Account	Debit	Credit
a	Depreciation	$    3,600
	Accumulated Depreciation - Building		$    3,600
b	Depreciation	$    2,400
	Accumulated Depreciation - Computer		$    2,400
c	Salaries and Wages Expense	$    2,170
	Accrued Salaries and Wages		$    2,170
d	Insurance Expense	$    2,500
	Prepaid Expense		$    2,500
e	Accounts Receivable	$    4,350
	Fees Earned		$    4,350
f	Supplies Expense	$    1,075
	Supplies		$    1,075
g	Rent Unearned	$    4,400
	Rent Income		$    4,400

NOTE- Please see the following explanations

a. It will increase the accumulated depreciation - Building by $3,600 and create a new line of Depreciation Expense
b. It will increase the accumulated depreciation - Equipment by $2,400 and also increase the new line of Depreciation Expense created in a. above
c. It will increase the Salaries and Wages expense by $2,170 and create a new account of Accrues Salaries and Wages
d. Prepaid Insurance as at Dec 31 is $3,500 which means the balance (opening was $6,000) is to be expensed off
e. Fees has been earned but not yet been billed. The entry would increase Accounts Receivable and Fees earned acounts
f. Supplies were $1,450 in the beginning and are $350 now. The difference is the consumption
g. Unearned rent was $7,200 which is $2,800 now. This means the difference has been earned.

The adjusted Trial is as follows

Account	Debit	Credit
Cash	$        4,200
Accounts Receivable	$     24,950
Prepaid Insurance	$        3,500
Supplies	$           375
Land	$ 1,00,000
Building	$ 1,61,500
Accumulated Depreciation Building		$     79,300
Equipment	$     80,100
Accumulated Depreciation Equipment		$     37,700
Accounts Payable		$        7,500
Unearned Rent		$        2,800
Curtis Loomis, Capital		$ 1,57,100
Curtis Loomis, Drawing	$        5,000
Fees Earned		$ 2,61,550
Salaries and Wages Expense	$ 1,03,970
Utilities Expense	$     29,275
Advertising Expense	$     15,000
Repairs Expense	$     12,100
Miscellaneous Expense	$        4,050
Rent Income		$        4,400
Depreciation Expense	$        6,000
Insurance Expense	$        2,500
Accrued Salaries and Wages		$        2,170
	$ 5,52,520	$ 5,52,520