Question

Following are two income statements for Alexis Co. for the year ended December 31. The left number column is prepared before adjusting entries are recorded, and the right column is prepared after adjusting entries. The company records cash receipts and payments related to unearned and prepaid items in balance sheet accounts.

Income Statements For Year Ended December 31 Unadjusted Adjusted Revenues Fees earned $24,000 $30, 600 Commissions earned 42,500 42,500 Total revenues $66,500 73,100 Expenses Depreciation expense-Computers 0 1,650 Depreciation expense-Office furniture 0 1,925 Salaries expense 12,500 15,195 Insurance expense 0 1,430 Rent expense 4,500 4,500 Office supplies expense 0 528 Advertising expense 3,000 3,000 Utilities expense 1,250 1,327 Total expenses 21, 250 29,555 Net income $45, 250 $43,545

Analyze the statements and prepare the seven adjusting entries that likely were recorded. Hint: Entry for arefers to fees that have been earned but not yet billed. None of the entries involve cash.

Answer 1

ADJUSTING JOURNAL ENTRIES

Serial Number	Account Titles	Debit	Credit
1	Accounts Receivable	$6600
	Fees Earned		$6600
( Being accrued revenue recorded )
2	Depreciation Expense	$1650
	Accumulated Depreciation - Computer		$1650
( Being depreciation recorded on Computer )
3	Depreciation Expense	$1925
	Accumulated Depreciation - Office Furniture		$1925
( Being depreciation recorded on Office Furniture )
4	Salaries Expenses	$2695
	Salaries Payable		$2695
( Being salary expense payable recorded )
5	Insurance Expense	$1430
	Prepaid Insurance		$1430
( Being insurance expense recorded )
6	Office Supplies Expense	$528
	Supplies		$528
( Being supplies expense recorded )
7	Utilities Expenses	$77
	Utilities Payable		$77
( Being utilities expenses recorded )

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