Question

Bill's Boards (BB) is an outdoor advertising company founded by William Longfall. William knows very little accounting so he hired a friend to "keep the books." Unfortunately, William did not review his friend's work and now it seems his friend has made a mess of the accounting records. William has provided you the following list of unadjusted account balances at BB's September 30 fiscal year-end. You have reviewed the balances with William and made notes shown in the right column. Account Name Cash Accounts Receivable Prepaid Rent Supplies Equipment Accumulated Depreciation Accounts Payable Deferred Revenue BILL'S BOARDS Unadjusted Trial Balance At September 30 Debits Credits Notes $13, 400 This balance equals the balance reported by the bank. 1,020 A customer ordered $1,020 of advertising services to be provided in October. The account ant recorded this service by debiting Accounts Receivable and crediting Service Revenue. 640 Starting January 1, BB agreed to pay $960 cash to rent the land on which its billboards are located, for the January-December period. The account ant adjusted this account on April 30 but has not adjusted it since. BB still has supplies costing $220 on hand on September 30. BB bought scaffolding and billboards in October last year. Because the equipment was bought at the beginning of the fiscal year, no depreciation is carried forward from prior years. 2,120 BB purchased and received $2,120 of supplies used for creating advertising displays. The supplier is to be paid in October 1,530 This balance relates to $1,530 cash paid by a customer in August for advertising from September 1-Novenber 30. nployees are still waiting to be paid for the last half of September. 510 BB hasn't paid the $510 tax owed from the last fiscal year. 2, 410 BB has issued 4, 810 shares for $2,410 cash. 9, 110 BB started business a few years ago, so this is the tot al accumulated earnings up to October 1 of last year. 57, 220 BB has provided $4, 820 of services for which it hasn't yet billed customers or recorded in its accounting records. 47,600 BB's employees earn $5, 600 per month. The employees were paid in full on August 31, and were paid again on September 15. About $1,400 of the usefulness of the equipment's $5, 600 cost has been used up during the current fiscal year. BB incurs a small cost to rent the land on which its billboards are located. Rent for the current year has been paid in full. 3,920 BB' s accountant expensed $3,920 of supplies purchased during the year because he assumed the supplies would be completely used by year-end. As noted above, he was wrong. BB's tax rate is 20% of income before tax. $72,900 $72.900 Salaries and Wages Payable Income Tax Payable Common Stock Retained Earnings Service Revenue Salaries and Wages Expense Depreciation Expense Rent Expense Supplies Expense Income Tax Expense Totals General Statement of General Income Requirement Trial Balance Retained Journal Statement Balance Sheet Ledger Earnings Prepare the adjusting journal entries for the year ended September 30. (If no entry is required for a transaction/event, select "No Journal Entry Required in the first account field.)

Answer 1

Bill Board's Adjusting Enteries Date Particulars Sep-30 Service Revenue a/c To Accounts Receivable (Entry reversed) Debit in $ Credit in $ 1020 Dr. 1020 400 Sep-30 Rent Expense a/c Dr. To prepaid Rent (Rent Expensed) 960 / 12 = 80 x 5 400 Dr. Sep-30 Supplies a/c To Supplies expense (Correction entry) 220 Sep-30 Depreciation expense a/c Dr. To Accum. Depre - Equip. (To record depreciation) 1400 510 Sep-30 Deferred Revenue a/c Dr. To Service Revenue (Revenue recognized) 1530 / 3 510 Dr. 4820 Sep-30 Accounts Receivable a/c To Service Revenue (Revenue billed) 4820 2800 Sep-30 Salaries and Wages Expense a/c Dr. To Salaries and Wages Payable (Salary accrued) 5600/2 2800 Dr. 982 Sep-30 Income Tax Expense a/c To Income Tax Payable (Income Tax accrued) 982

Worksheet For the period ending Dec 31 Unadjusted Adjustments Adjusted Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ 13400 13400 1020 4820 1020 4820 640 400 240 220 220 5600 5600 1400 1400 2120 2120 1530 510 1020 2800 510 982 1492 2410 2410 9110 9110 57220 5330 61530 47600 2800 50400 1400 1400 720 400 1120 3920 220 3700 982 982 72900 72900 12152 12152 81882 81882 Particulars Cash Accounts Receivable Prepaid Rent Supplies Equipment Accum. Depre - Equipment Accounts Payable Deferred Revenue Salaries and Wages Payable Income Tax Payable Common Stock Retained Earnings Service Revenue Salaries and Wages Expense Depreciation expense Rent Expense Supplies expense Income Tax Expense Totals 2800 61530 Statement of Income For the period ending Dec 31 Service Revenue Less: Salaries and Wages Expense Depreciation expense Rent Expense Supplies expense 50400 1400 1120 3700 56620 4910 -982 3928 Income Tax Expense @ 20% Net Income Statement of Retained Earnings For the period ending Dec 31 Beginning Balance Net Income Ending Balance 9110 3928 13038

Amounts in $ Amounts in $ Balance sheet As at Dec 31 Assets Current Assets Cash Accounts Receivable Prepaid Rent Supplies Amounts in $ Amounts in $ Liabilities Current Liabilities 13400 Accounts Payable 4820 Deferred Revenue 240 Salaries and Wages Payable 220 18680 Income Tax Payable 2120 1020 2800 1492 7432 Non Current Assets Equipment Accum. Depre - Equipment Total Assets 5600 -1400 Shareholders Equity Common Stock 4200 Retained Earnings 22880 Total Liabilities & Equity 2410 13038 15448 22880