Question

Show the effect, if any, of the transaction entry or adjustment on the appropriate balance sheet category or on the income statement by entering the amount and indicating whether it is an addition (+) or a subtraction (-). Column headings reflect the expanded balance sheet equation; items that affect net income should not be shown as affecting stockholders' equity. In some cases, only one column may be affected because all of the specific accounts affected by the transaction are included in that category. Transaction a has been completed as an illustration. a. During the month, Supplies Expense was debited $2,340 for supplies purchased. The cost of supplies used during the month was $1,820. Record the adjustment to properly reflect the amount of supplies used and supplies still on hand at the end of the month. b. Independent of transaction o, assume that during the month, Supplies (asset) was debited $2,340 for supplies purchased. The total cost of supplies used during the month was $1.820. Record the adjustment to properly reflect the amount of supplies used and supplies still on hand at the end of the month. c. Received $1,040 of cash from clients for services provided during the current month. d. Paid $650 of accounts payable. e. Received $390 of cash from clients for revenues accrued at the end of the prior month. f. Received $1,170 of interest revenue accrued at the end of the prior month. g. Received $1,560 of interest revenue for the current month. h. Accrued $910 of interest revenue earned in the current month. 1. Paid $2,470 of interest expense for the current month. j. Accrued $780 of interest expense at the end of the current month. k. Accrued $3,250 of commissions payable to sales staff for the current month. Required: a. Indicate the financial statement effect. b. Prepare the journal entry for the above transactions.

Answer 1

Working as follows:

Trn.	General Journal	Debit	Credit		Assets	Liabilities	Stockholders' Equity	Net Income
a)	Supplies [$2340 - $1820]	$520			$520
	Supplies Expense		$520					$520
b)	Supplies Expense	$1,820						($1,820)
	Supplies		$1,820		($1,820)
c)	Cash	$1,040			$1,040
	Service Revenue		$1,040					$1,040
d)	Accounts payable	$650				($650)
	Cash		$650		($650)
e)	Cash	$390			$390
	Accounts receivable		$390		($390)
f)	Cash	$1,170			$1,170
	Interest receivable		$1,170		($1,170)
g)	Cash	$1,560			$1,560
	Interest revenue		$1,560					$1,560
h)	Interest receivable	$910			$910
	Interest revenue		$910					$910
i)	Interest Expense	$2,470						($2,470)
	Cash		$2,470		($2,470)
j)	Interest Expense	$780						($780)
	Interest payable		$780			$780
k)	Commission Expense	$3,250						($3,250)
	Commission payable		$3,250			$3,250

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