24E_3 - Horngren'S Financial And Managerial Accounting

Question

Question : The accounting records of Mackay Architects include the following selected, unadjusted balances at March 31: Accounts Receivable, \(1,500; Office Supplies, \)700; Prepaid Rent, \(2,240; Equipment, \)8,000; Accumulated Depreciation—Equipment, \(0; Salaries Payable, \)0; Unearned Revenue, \(900; Service Revenue, \)4,100; Salaries Expense, \(800; Supplies Expense, \)0; Rent Expense, \(0; Depreciation Expense—Equipment, \)0. The data developed for the March 31 adjusting entries are as follows: a. Service revenue accrued, \(700. b. Unearned revenue that has been earned, \)100. c. Office Supplies on hand, \(300. d. Salaries owed to employees, \)200. e. One month of prepaid rent has expired, \(560. f. Depreciation on equipment, \)120. Requirements 1. Open a T-account for each account using the unadjusted balances given. 2. Journalize the adjusting entries using the letter and March 31 date in the date column. 3. Post the adjustments to the T-accounts, entering each adjustment by letter. Show each account’s adjusted balance.

Step-by-Step Solution

Answer

T accounts are as follows:

Accounts Receivable
	$1,500
(a)	700
Bal.	$2,200

 

Office Supplies
	$700	$400	(c)
Bal.	$300

 

Prepaid Rent
	$2,240	$560	(e)
Bal.	$1,680

 

Equipment
	$8,000
Bal.	$8,000

 

Accumulated Depreciation- Equipment
		$120	(f)
		$120	Bal.

 

Salaries Payable
		$200	(d)
		$200	Bal.

 

Unearned Revenue
		$900
(b)	$100
		$800	Bal.

 

Service Revenue
		$4,100
		$700	(a)
		$100	(b)
		$4,900	Bal.

 

Salaries Expense
	$800
(d)	$200
Bal.	$1,000

 

Supplies Expense
(c)	$400
Bal.	$400

 

Rent Expense
(e)	$560
Bal.	$560

 

Depreciation Expense-Equipment
(f)	$120
Bal.	$120

Step-by-Step-Solution Step1: Explanation on T account

T account is prepared in the T style fortmat, which records the changes in the accounts.

Step2: Explanation on Adjusting Entries

Adjusting entries are the year end entries, which are recorded to record the accrued revenues and expenses for the period.