At the end of August,  the  first  month  of  operations,  the  following  selected  data  were taken  from  the  financial  statements  of  Tucker  Jacobs,  an  attorney:

Net income for August	$112,500
Total assets at August 31	650,000
Total liabilities at August  31	225,000
Total stockholders’ equity at August  31	425,000

In preparing the financial statements, adjustments for the following data were   overlooked:

a.     Unbilled fees earned at August 31, $31,900.

b.     Depreciation of equipment for August, $7,500.

c.     Accrued wages at August 31, $5,200.

d.     Supplies used during August, $3,000.

Instructions

1.     Journalize the entries to record the omitted adjustments.

2.     Determine the correct amount of net income for August and the total assets, liabilities, and stockholders’ equity at August 31. In addition to indicating the corrected amounts, indicate the effect of each omitted adjustment by setting up and completing a columnar table similar to the following. Adjustment (a) is presented as an example.

 

Net Income

 

Total Assets =                            Total Liabilities + Total Stockholders’ Equity

Reported amounts Corrections:

                                                                                                                                                                                                 $112,500  $650,000                              $225,000                 $425,000

 

Adjustment  (a)                                  +31,900          +31,900                         0                    +31,900

Adjustment  (b)                          _________     _________    _________            _________ Adjustment  (c)    _________     _________    _________            _________ Adjustment  (d)   _________     _________    _________            _________

Corrected  amounts

    

 

The unadjusted trial balance that you prepared for PS Music at the end of Chapter 2 should appear as follows:

 

 

PS Music Unadjusted Trial Balance

July 31, 2016

Debit Balances

Credit Balances

 

 

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9,945	Â	Â	Â
Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2,750	Â	Â
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1,020	Â	Â
Prepaid Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2,700	Â	Â
Office Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7,500	Â	Â
Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Â	Â	8,350
Unearned Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Â	Â	7,200	Â
Common Stock  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Â	Â	9,000	Â
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1,750	Â	Â	Â
Fees Earned. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Â	Â	16,200	Â
Music Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3,610	Â	Â	Â
Wages Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2,800	Â	Â	Â
Office Rent Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2,550	Â	Â	Â
Advertising Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1,500	Â	Â	Â
Equipment Rent Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1,375	Â	Â	Â
Utilities Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1,215	Â	Â	Â
Supplies Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	180	Â	Â	Â
Miscellaneous Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	  1,855	Â	              Â	Â
Â	40,750	Â	40,750	Â

The data needed to determine adjustments are as follows:

a.    During July, PS Music provided guest disc jockeys for KXMD for a total of 115 hours. For information on the amount of the accrued revenue to be billed to KXMD, see the contract described in the July 3, 2016, transaction at the end of Chapter 2.

b.    Supplies on hand at July 31, $275.

c.     The balance of the prepaid insurance account relates to the July 1, 2016, transaction at the end of Chapter 2.

d.    Depreciation of the office equipment is $50.

e.     The balance of the unearned revenue account relates to the contract between PS Music and KXMD, described in the July 3, 2016, transaction at the end of Chapter 2.

f.     Accrued wages as of July 31, 2016, were $140.

Instructions

1.    Prepare adjusting journal entries. You will need the following additional accounts: 18 Accumulated Depreciation—Office Equipment

22 Wages Payable

57   Insurance Expense

58   Depreciation Expense

2.    Post the adjusting entries, inserting balances in the accounts affected.

3.    Prepare an adjusted trial balance.