Question

Jake Thomas began Thomas Refinishing Service on July 1, 2019. Selected accounts are shown below as of July 31, before any adjusting entries have been made.

Unadjusted Account Balances	Debit	Credit
Prepaid rent	$5,700
Prepaid advertising	630
Supplies inventory	3,000
Performance obligation liability		$600
Refinishing fees revenue		2,500

Using the following information, prepare the adjusting entries necessary on July 31 (a) using the financial statement effects template

1. On July 1, the firm paid one year’s advance rent of $5,700 in cash.
2. On July 1, $630 cash was paid to the local newspaper for an advertisement to run daily for the months of July, August, and September.
3. Supplies still available at July 31 total $1,100.
4. At July 31, refinishing services of $800 have been performed but not yet recorded or billed to customers. The firm uses the account Fees Receivable to reflect amounts due but not yet billed.
5. A customer paid $600 in advance for a refinishing project. At July 31, the project is one-half complete.

Balance Sheet									Income Statement
Transaction	Cash Asset	+	Noncash Asset	=	Liabilities	+	Contrib. Capital	+	Earned Capital	Revenues	-	Expenses	=	Net Income
1. Adjusting entry for rent expense.		+		=		+		+			-		=
2. Adjusting entry for advertisement expense.		+		=		+		+			-		=
3. Adjusting entry for supplies expense.		+		=		+		+			-		=
4. Adjusting entry for fees revenue.		+		=		+		+			-		=
5. Adjusting entry for fees revenue.		+		=		+		+			-		=
TOTALS		+		=		+		+			-		=

Answer 1

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Answer is highlighted in yellow: Sign of decrease can be +/- per question: Solution: Income Statement Balance Sheet Noncas Cash h Asset + Asset Liabiliti es Contrib Earned Revenul Expens Net + Capital + Capital es = Income = es -475+ -475 475 = -475 (5700/12) -210+ + + -210 210 = -210 (630/3) Transaction 1. Adjusting entry for rent expense. 2. Adjusting entry for advertisement expense. 3. Adjusting entry for supplies expense. 4. Adjusting entry for fees revenue. 5. Adjusting entry for fees revenue. TOTALS -1900 + -1900 1900/= -1900 (3000-1100) 800+ + + 800 800 800 -3001 -3001 300 -1485 3001 1100- 300 -1485 -1785 2585