Question

Facts: Basic Services, Inc. prepares annual financial statements and accordingly records most of the company's adjusting journal entries just once per year in December. Basic purchases 100% of the office supplies on account from vendor, Standard Company. Basic provides you with the below unadjusted account balances as of 12/31/2017: Cash $24,950 Utilities Payable $0 Accounts receivable 21,700 Common stock 50,000 Prepaid Advertising Expense 0 Retained earnings 55,000 Prepaid Insurance Expense 4,020 Dividends 18,000 Office Supplies 9,000 Service Revenue 250,000 Store equipment 115,000 Advertising Expense 27,750 Office equipment 60,000 Salary Expense 118,000 Accumulated depreciation 22,000 Depreciation Expense 19,000 Accounts payable- Standard Co. 2,300 Office supplies expense 2,000 Dividends Payable 3,000 Insurance Expense 0 Interest Payable 0 Interest expense 0 Notes payable 60,000 Miscellaneous Expense 2,815 Rent Payable 0 Rent Expense 18,700 Salaries Payable 0 Utilities Expense 7,865 Unearned Service Fees 6,500

Answer 1

40 Following adjusting entries will be passed for d & e 41 8,365 42 d) 43 Prepaid Advertising (8400/10*1)+(35*215) Advertising expense (To record prepaid advertising) 8,365 44 45 46 e) 47 2,560 Wages expense (7680/15*5) Wages Payable (To record accrued wages) 2,560 48 49 50 51 52 d) 53 e) 54 Unadjusted Net Income Add Prepaid Advertising (8400 *1/10)+(35*215) Less Salary expense (7680/21*9) Adjusted Net income 53,870 8,365 2,560 59,675 55 56 Answer A) $59,675 57