Following are two income statements for Alexis Co. for the year ended December 3
ID: 2342185 • Letter: F
Question
Following are two income statements for Alexis Co. for the year ended December 31. The left number column is prepared before any adjusting entries are recorded, and the right column includes the effects of adjusting entries. The company records cash receipts and payments related to unearned and prepaid items in balance sheet accounts. The middle column shows a blank space for each income statement effect of the eight adjusting entries a through g (the balance sheet part of the entries is not shown here).
ALEXIS CO.
Income Statements
For Year Ended December 31
Unadjusted
Adjustments
Adjusted
Revenues
Fees earned
$
24,000
a.
$
30,600
Commissions earned
42,500
42,500
Total revenues
$
66,500
73,100
Expenses
Depreciation expense—Computers
0
b.
1,650
Depreciation expense—Office furniture
0
c.
1,925
Salaries expense
12,500
d.
15,195
Insurance expense
0
e.
1,430
Rent expense
4,500
4,500
Office supplies expense
0
f.
528
Advertising expense
3,000
3,000
Utilities expense
1,250
g.
1,327
Total expenses
21,250
29,555
Net income
$
45,250
$
43,545
Analyze the statements and prepare the eight adjusting entries a through g that likely were recorded. Note: Answer for a has two entries 30% of (i) the $6,600 adjustment for Fees Earned has been earned but not billed, and (ii) the other 70% has been earned by performing services that were paid for in advance.
· 1- Record the adjusting entry for accrued revenues.
Record the adjusting entry for accrued revenues.
2- Record the adjusting entry related to fees collected in advance.
3- Record depreciation on computers.
4- Record depreciation on office furniture.
5- Record the adjusting entry related to salaries.
6- Record the adjusting entry related to insurance.
7- Record the adjusting entry related to office supplies.
8- Record the adjusting entry related to utilities.
Transaction
General Journal
Debit
Credit
g.
ALEXIS CO.
Income Statements
For Year Ended December 31
Unadjusted
Adjustments
Adjusted
Revenues
Fees earned
$
24,000
a.
$
30,600
Commissions earned
42,500
42,500
Total revenues
$
66,500
73,100
Expenses
Depreciation expense—Computers
0
b.
1,650
Depreciation expense—Office furniture
0
c.
1,925
Salaries expense
12,500
d.
15,195
Insurance expense
0
e.
1,430
Rent expense
4,500
4,500
Office supplies expense
0
f.
528
Advertising expense
3,000
3,000
Utilities expense
1,250
g.
1,327
Total expenses
21,250
29,555
Net income
$
45,250
$
43,545
Explanation / Answer
Date General Journal Debit Credit 31-Dec Accounts receivable 1,980 =6600*30% Fees earned 1,980 31-Dec Unearned fees 4,620 =6600*70% Fees earned 4,620 31-Dec Depreciation expense—Computers 1,650 Accumulated depreciation—Computers 1,650 31-Dec Depreciation expense—Office furniture 1,925 Accumulated depreciation—Office furniture 1,925 31-Dec Salaries expense 2,695 =15195-12500 Salaries payable 2,695 31-Dec Insurance expense 1,430 Prepaid insurance 1,430 31-Dec Office supplies expense 528 Office supplies 528 31-Dec Utilities expense 77 =1327-1250 Utilities payable 77