Crazy Mountain Outfitters Co.
Unadjusted Trial Balance
April 30, 2014
Debit
Balances
Credit
Balances
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,400
Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,600
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,200
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112,000
Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,200
Unearned Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,200
Diana Keck, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137,800
Diana Keck, Drawing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Fees Earned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305,800
Wages Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157,800
Rent Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,000
Utilities Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,000
Miscellaneous Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000
475,000 475,000
For preparing the adjusting entries, the following data were assembled:
a. Supplies on hand on April 30 were $1,380.
b. Fees earned but unbilled on April 30 were $3,900.
c. Depreciation of equipment was estimated to be $3,000 for the year.
d. Unpaid wages accrued on April 30 were $2,475.
e. The balance in unearned fees represented the April 1 receipt in advance for services to be provided. Only $14,140 of the services was provided between April 1 and April 30.
Instructions
1. Journalize the adjusting entries necessary on April 30, 2014.
2. Determine the revenues, expenses, and net income of Crazy Mountain Outfitters Co. before the adjusting entries.
3. Determine the revenues, expense, and net income of Crazy Mountain Outfitters Co. after the adjusting entries.
4. Determine the effect of the adjusting entries on Diana Keck, Capital
Answer:
1. a. Supplies Expense 5,820
Supplies 5,820
Supplies used ($7,200 – $1,380).
b. Accounts Receivable 3,900
Fees Earned 3,900
Accrued fees earned.
c. Depreciation Expense 3,000
Accumulated Depreciation—Equipment 3,000
Equipment depreciation.
d. Wages Expense 2,475
Wages Payable 2,475
Accrued wages.
e. Unearned Fees 14,140
Fees Earned 14,140
Fees earned.
2. Revenues…………………… $305,800
Expenses…………………… 261,800 ($157,800 + $55,000 + $42,000 + $7,000)
Net Income………………… $ 44,000
3. Revenues…………………… $323,840 ($305,800 + $3,900 + $14,140)
Expenses…………………… 273,095 ($261,800 + $5,820 + $3,000 + $2,475)
Net Income…………………… $ 50,745
4. The effect of the adjusting entries on Diana Keck, Capital is the difference
in net income in (3) and (2) of $6,745 ($50,745 – $44,000), which would increase
Diana Keck, Capital.