Question

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Show the effect, if any, of the transaction entry or adjusting entry on the appropriate balance sheet category or on the income statement by selecting the amount and indicating whether it is an addition (+) or a subtraction (-). Column headings reflect the expanded balance sheet equation; items that affect net income should not be shown as affecting stockholders' equity. In some cases, only one column may be affected because all of the specific accounts affected by the transaction are included in that category. Transaction a has been completed as an illustration. a. Provided services to a client on account: revenues totaled $510. b. Paid an insurance premium of $360 for the coming year. An asset, Prepaid Insurance, was debited. C. Recognized insurance expense for one month from the premium transaction in b via a reclassification adjusting entry. d. Paid $825 of wages accrued at the end of the prior month. e. Paid $2,500 of wages for the current month. f. Accrued $675 of wages at the end of the current month. g. Received cash of $1,575 on accounts receivable accrued at the end of the prior month Required: a. Indicate the financial statement effect. b. Prepare the journal entry for the above transactions. Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B

Answer 1

Transaction/ Adjustment 510 Balance sheet Stockholders' Assets = Liabilities + equity Net income effect 510 510 + 360 and -360 -301 -30 -825 -825 -2500 -2500 -2500 675) -675 -675 +1,575 and -1,575 .30

No	Event	Account title and explanation	Debit	Credit
1	a	Accounts receivable	510
		Service revenue		510
2	b	Prepaid insurance	360
		Cash		360
3	c	Insurance expense	30
		Prepaid insurance		30
4	d	Wages payable	825
		Cash		825
5	e	Wages expense	2,500
		Cash		2,500
6	f	Wages expense	675
		Wages payable		675
7	g	Cash	1,575
		Accounts receivable		1,575