Question

At the end of April, the first month of operations, the following selected data were taken from the financial statements of Shelby Crawford, an attorney:

Net income for April	$120,000
Total assets at April 30	750,000
Total liabilities at April 30	300,000
Total owner’s equity at April 30	450,000

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

•	Supplies used during April, $2,750.
•	Unbilled fees earned at April 30, $23,700.
•	Depreciation of equipment for April, $1,800.
•	Accrued wages at April 30, $1,400.

Required:

1.	Journalize the entries on April 30 to record the omitted adjustments. Refer to the Chart of Accounts for exact wording of account titles.
2.	Determine the correct amount of net income for April and the total assets, liabilities, and owner’s equity at April 30

Answer 1

Journal entry

No	General Journal	Debit	Credit
1	Supplies expense	2750
	Supplies		2750
2	Account receivable	23700
	Fees earned		23700
3	Depreciation expense	1800
	Accumulated depreciation-equipment		1800
4	Wages expense	1400
	Wages payable		1400

2) Correct amount

	Net income	Total assets	Total liabilities	Owner's equity
Balance	120000	750000	300000	450000
1.	-2750	-2750		-2750
2	23700	23700		23700
3	-1800	-1800		-1800
4	-1400		1400	-1400
End bal	137750	769150	301400	467750