Determining Adjustments

 

p1. At the end of the first three months of operation, Kubose Answering Service, Inc.’s trial balance appears as follows. Kubose has hired an accountant to prepare financial statements to determine how well the company is doing after three months. Upon examining the accounting records, the accountant finds the following items of interest:

 

a.   An inventory of office supplies reveals supplies on hand of $133.

 

b.   The Prepaid Rent account includes the rent for the first three months plus a deposit for April’s rent.

 

c.    Depreciation on the equipment for the first three months is $208.

 

d.   The balance of the Unearned Answering Service Revenue account represents a 12-month service contract paid in advance on February 1.

 

e.    On March 31, accrued wages total $80.

 

f.    Federal income taxes for the three months are estimated to be $980.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kubose Answering service, Inc. trial Balance

 

March 31, 2014

 

 

 

Cash	3,482	Â
Accounts Receivable	4,236
Office Supplies	903
Prepaid Rent	800
Equipment	4,700
Accounts Payable	Â	Â	2,673
Unearned Answering Service Revenue	Â	Â	888
Common Stock	Â	Â	5,933
Dividends	2,130	Â	Â
Answering Service Revenue	Â	Â	9,002
Wages Expense	1,900	Â	Â
Office Cleaning Expense	345	Â	Â
Â	18,496	Â	18,496

 

 

 

 

 

 

ReQUIReD

 

All adjustments affect one balance sheet account and one income statement account. For each of these situations, show the accounts affected, the amount of the adjustment (using a + or – to indicate an increase or decrease), and the balance of the account after the adjustment in the following format:

 

 

 

Balance	Amount of	Balance	Income	Amount of	Balance
sheet	Adjustment	After	statement	Adjustment	After
Account	(+ or –)	Adjustment	Account	(+ or –)	Adjustment