Question

Part VI. Effects of Adjusting Entries (9 points) Yarde's Boat Yard, Inc. repairs, stores, and cleans boats for its customers. Faith had the following adjusting entries she needed to record on 12/31/20. Faith had cleaned and covered three boats for customers in December, but had not invoiced the customers and has not been paid for the work, $2,700. She prepared the following entry on 12/31/20: Debit: Accounts Receivable $2,700 and Credit: Service Revenues $2,700. b. Faith used boat-lifting equipment with estimated depreciation of $22,000 that had not been recorded. She prepared the following entry on 12/31/20: Debit: Depreciation expense S22,000 and Credit: Accumulated Depreciation 522,000. e. On 12/31, Faith received a $300 bill for utilities that will is due to be paid by 1/31/20. She made the following journal entry: Debit: Utilities Expense $300 and Credit: Utilities Payable 300 For each of the transactions listed above, indicate the direction of the effects of the adjusting entry on the elements of the balance sheet and the income statement in each blank box. Using the following format: Indicate: * for increase "_for decrease "NE" if there is no effect. There are no journal entries required for this! Balance sheet Income Statement Transaction Assets Liabilities Revenues Expenses Stockholder's Equity Net Income You have reached the end of this exam.

Answer 1

	BALANCE SHEET			INCOME STATEMENT
Transactions	Asset	Liabilities	Equity	Revenue	expense	Net income
1	+	NE	+	+	NE	+	Revenue earned but not received is an asset as same is receivable in future .Also revenue earned is a part of equity (retained earning)
2	-	NE	-	NE	+	-	Accumulated depreciation is a contra asset which is represented by way of subtraction from gross fixed asset .thus it decreases the asset amount.Expense reduces net income which in turn decreased equity.
3	NE	+	-	NE	+	-	utilities payable is a liability thus it is increased when credited .Expense reduces net income which in turn decreased equity.