Q9E - Intermediate Accounting (Kieso)

Question

Selected accounts of Urdu Company are shown below.

Supplies
Beg. Bal	800	10 ⁄ 31	470

 

Salaries and Wages Expense
10 ⁄ 15	800
10 ⁄ 31	600

 

Unearned Service Revenue
10 ⁄ 31	400	10 ⁄ 20	650

 

Service Revenue
		10 ⁄ 17	2,400
		10 ⁄ 31	1,650
		10 ⁄ 31	400

 

Accounts Receivable
10 ⁄ 17	2,400
10 ⁄ 31	1,650

 

Salaries and Wages Payable
		10 ⁄ 31	600

 

Supplies Expense
10 ⁄ 31	470

 

Instructions 

From an analysis of the T-accounts, reconstruct 

(a) the October transaction entries, and 

(b) the adjusting journal entries that were made on October 31, 2017. Prepare explanations for each journal entry

Step-by-Step Solution

Answer

1. The total debit and credit side of the journal is $3,850.
2. The total debit and credit side of the adjusting journal is $3,120.

 

Step 1: Meaning of Journal Entries

A journal entry refers to a record of the monetary business transactions in a date-wise manner and a proper format.

Step 2: (a) Preparing for the transaction entries

 

Date	Particulars	Debit ($)	Credit ($)
Oct. 15, 2017	Salaries & Wages expense	800
	Cash		800
	(To record payment of October 15 payroll)
Oct. 17, 2017	Account receivables	2,400
	To service revenue		2,400
	(To record revenue for services performed for which payment has not yet been received)
Oct. 20, 2017	Cash	650
	Unearned service revenue		650
	(To record receipt of cash for service not yet performed)
		$3,850	$3,850

 

Step 3: (b) Preparing adjusting journal entries

 

Date	Particulars	Debit ($)	Credit ($)
Oct. 31, 2017	Supplies expense	470
	Supplies		470
	(To record the use of supplies during October)
Oct. 31, 2017	Accounts receivables	1,650
	Service revenue		1,650
	(To record revenue for services performed for which payment has not yet been received)
Oct. 31, 2017	Salaries & Wages expense	600
	Salaries & wages payable		600
	(To record liability for accrued payroll)
Oct. 31, 2017	Unearned service revenue	400
	Service revenue		400
	(To reduce unearned service) revenue, account for service that has been performed)
		$3,120	$3,120