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 (c) Set up T-accounts for each of the ledger accounts, enter the balances above, and post the adjusting entries to them.

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.

Prepaid Rent
Bal.	5,700
Bal.

Prepaid Advertising
Bal.	630
Bal.

Fees Receivable

Supplies
Bal.	3,000
Bal.

Refinishing Fees Revenue
Bal.		2,500
Bal.

Performance Obligation Liability
Bal.		600
Bal.

Supplies Expense

Advertising Expense

Rent Expense

Answer 1

Prepaid Rent
Bal.	5,700
		475
Bal.	5,225
Prepaid Advertising
Bal.	630
		210
Bal.	420
Fees Receivable
	800
Supplies
Bal.	3,000
		1900
Bal.	1,100
Refinishing Fees Revenue
Bal.		2,500
		800
		300
Bal.		3,600
Performance Obligation Liability
Bal.		600
	300
Bal.		300
Supplies Expense
	1900
Advertising Expense
	210
Rent Expense
	475