Question

Sarah Allen started her own consulting firm, Allen Consulting, on May 1, 2020. The trial balance at May 31 is as follows. ALLEN CONSULTING Trial Balance May 31, 2020 Account Number Debit Credit 101 Cash $ 4,700 112 Accounts Receivable 6,000 126 Supplies 2,100 130 Prepaid Insurance 2,400 149 Equipment 10,800 201 Accounts Payable $ 4,300 209 Unearned Service Revenue 2,100 301 Owner’s Capital 16,800 400 Service Revenue 7,500 726 Salaries and Wages Expense 3,300 729 Rent Expense 1,400 $30,700 $30,700 In addition to those accounts listed on the trial balance, the chart of accounts for Allen Consulting also contains the following accounts and account numbers: No. 150 Accumulated Depreciation—Equipment, No. 212 Salaries and Wages Payable, No. 631 Supplies Expense, No. 717 Depreciation Expense, No. 722 Insurance Expense, and No. 732 Utilities Expense. Other data: 1. $1,000 of supplies have been used during the month. 2. Utilities expense incurred but not paid on May 31, 2020, $200. 3. The insurance policy is for 2 years. 4. $500 of the balance in the unearned service revenue account remains unearned at the end of the month. 5. May 31 is a Wednesday, and employees are paid on Fridays. Allen Consulting has two employees, who are paid $1,100 each for a 5-day work week. 6. The office furniture has a 5-year life with no salvage value. It is being depreciated at $180 per month for 60 months. 7. Invoices representing $1,500 of services performed during the month have not been recorded as of May 31.

Prepare the adjusting entries for the month of May. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) No. Date Account Titles and Explanation Ref. Debit Credit 1. May 31 631 126 2. May 31 732 201 3. May 31 722 130 4. May 31 209 400 5. May 31 726 212 6. May 31 717 150 7. May 31 112 400

Answer 1

No. Ref. 1 Date Account Titles and Explanation May-31 Supplies expense Supplies (To record supplies expense) Debit ($) Credit ($) 631 1000 126 1000 2 200 May-31 Utilities Expense Accounts payable (To record utilities expense) 732 201 200 3 100 May-31 Insurance Expense Prepaid insurance (2400/24) (To record insurance for the month of may) 722 130 100 1600 4 May-31 Unearned service revenue Service revenue (2100-500) (To record service revenue earned during month) 209 400 1600 1320 5 May-31 Salaries and wages expense*** Salaries and wages payable (To record salaries and wages for 3 days) 726 212 1320 180 6 May-31 Depreciation expense Accumulated depreciation (To record depreciation expense) 717 150 180 1500 7 May-31 Account Receivable Service Revenue (To record service revenue) 112 400 1500

***Salaries and wages expense 5 days for $ 1100, but only 3 days this month for 2 employees = $ 1100/5*3*2 = $1320

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