Question

The trial balances before and after adjustment for Pharoah Company at October 31, 2021, which is the end of its fiscal year, are as follow Before Adjustment Debit Credit $9,100 After Adjustment Debit Credit Cash $9,100 Accounts Receivable 8,805 9,385 Supplies 2,580 660 Prepaid Insurance 3,835 2,550 34,315 Equipment 34,315 Accumulated Depreciation-Equipment $3,430 $5,665 5.985 Accounts Payable 5,985 Notes Payable 39,890 39,890 Salaries Payable 1.210 0 405 Interest Payable 890 Unearned Revenue 1,635 5,710 5,710 E.Pharoah, Capital 10,040 10,040 E. Pharoah, Drawings 46,060 47,385 Service Revenue Depreciation Expense 2.235 1,285 Insurance Expense

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Answer 1

Solution

Pharoah Company

1. Adjustment entries:

Date	Account Titles and Explanation	Debit	Credit
Oct 31, 2021	Accounts Receivable	$580
	Service Revenue		$580
	(To accrue revenue for services performed but not billed or collected)
Oct 31, 2021	Supplies Expense	$1,920
	Supplies		$1,920
	(To record cost of supplies used)
Oct 31, 2021	Insurance Expense	$1,285
	Prepaid Insurance		$1,285
	(To record insurance expired)
Oct 31, 2021	Depreciation Expense	$2,235
	Accumulated Depreciation		$2,235
	(To record depreciation expense)
Oct 31, 2021	Salaries Expense	$1,210
	Salaries Payable		$1,210
	(To record accrued salaries)
Oct 31, 2021	Interest Expense	$405
	Interest Payable		$405
	(To record interest accrued)
Oct 31, 2021	Unearned Revenue	$745
	Service Revenue		$745
	(To record earned portion of unearned revenue)

Income Statement

Pharoah Company
Income Statement
For the Year Ended October 31, 2021
Revenues
Service Revenue		$47,385
Expenses:
Depreciation Expense	$2,235
Insurance Expense	$1,285
Interest Expense	$1,620
Rent Expense	$15,445
Salaries Expense	$18,585
Supplies Expense	$1,920
Total Expenses		$41,090
Net Operating Income		$6,295

Statement of Owner’s Equity

Pharoah Company
Statement of Owner's Equity
As of October 31, 2021
E. Pharoah, Capital		$5,710
Less: E. Pharoah, Drawings		($10,040)
		($4,330)
Add: Net Income		$6,295
E. Pharoah, Capital		$1,965

Balance Sheet

Pharoah Company
Balance Sheet
As of October 31, 2021
Assets
Cash		$9,100
Accounts Receivable		$9,385
Supplies		$660
Prepaid Insurance		$2,550
Equipment	$34,315
Less: Accumulated depreciation	$5,665	$28,650
Total Assets		$50,345
Liabilities and Owner's Equity
Liabilities
Accounts Payable		$5,985
Notes Payable		$39,890
Salaries Payable		$1,210
Interest Payable		$405
Unearned Revenue		$890
Owner's Equity		$1,965
Total Liabilities and Owner's Equity		$50,345