Question

Reece Financial Services Co. Unadjusted Trial Balance July 31, 2019 Debit Balances Credit Balances Cash 10,200 34,750 Accounts Receivable Prepaid Insurance 6,000 Supplies Land 1,725 50,000 155,750 Building Accumulated Depreciation---Building 62,850 Equipment 45,000 Accumulated Depreciation Equipment 17,650 Accounts Payable 3,750 Unearned Rent Joni Reece, Capital Joni Reece, Drawing 3,600 153,550 8,000 Fees Eamed 158,600 Salaries and Wages Expense 56,850

Answer 1

1. The journal entries to be booked will be as under:

S.No.	Account Description	Debit ($)	Credit ($)
1	Depreciation Expense - Building	6,400.00
	Accumulated Depreciation - Buildings		6,400.00
2	Depreciation Expense - Equipment	2,800.00
	Accumulated Depreciation - Equipment		2,800.00
3	Salaries & Wages Expense	900.00
	Salaries & Wages Payable		900.00
4	Insurance Expense	4,500.00
	Prepaid Insurance		4,500.00
5	Accounts Receivable	10,200.00
	Fees Earned		10,200.00
6	Supplies Expense	1,110.00
	Supplies		1,110.00
7	Unearned Rent	3,300.00
	Rent Revenue		3,300.00

2. The adjusted trial balance will be prepared in the following manner:

	Debit ($)	Credit ($)	Workings
Cash	10,200
Accounts Receivable	44,950		34750+10200
Prepaid Insurance	1,500		6000-4500
Supplies	615		1725-1110
Land	50,000
Buildings	1,55,750
Accumulated Depreciation - Buildings		69,250	62850+6400
Equipment	45,000
Accumulated Depreciation - Equipment		20,450	17650+2800
Accounts Payable		3,750
Unearned Rent		300	3600-3300
Joni Reece Capital		1,53,550
Joni Reece Drawings	8,000
Fees Earned		1,68,800	158600+10200
Salaries & Wages Expense	57,750		56850+900
Utilities Expense	14,100
Advertising Expense	7,500
Repair Expense	6,100
Misc. Expense	4,025
Depreciation Expense - Building	6,400
Depreciation Expense - Equipment	2,800
Salaries & Wages Payable		900
Insurance Expense	4,500
Rent Revenue		3,300
Supplies Expense	1,110
TOTAL	4,20,300	4,20,300

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Workings

The journal entries have been prepared using the following rationale and workings

Credit ($) Explanation S.No. Account Description 1 Depreciation Expense - Building Debit ($) 6400 Depreciation expense on fixed assets is booked and transferred to accumulated depreciation periodically Accumulated Depreciation - Buildings 6400 2 Depreciation Expense - Equipment 2800 Depreciation expense on fixed assets is booked and transferred to accumulated depreciation periodically Accumulated Depreciation - Equipment 2800 Salaries & Wages Expense 900 Expense incurred but not paid will be booked and the unpaid portion will be booked as a liability Salaries & Wages Payable 900 4500 Insurance expired during the period will be booked as expense 4500 5 10200 Revenue earned but not billed will be recognized and a receivable asset will be created. 10200 Insurance Expense Prepaid Insurance Accounts Receivable Fees Earned Supplies Expense Supplies Unearned Rent Rent Revenue =1725-615 Supplies consumed during a period are booked as expense =1725-615 1=3600-300 Rent earned during the period will be booked as revenues =3600-300