The following six-column table for Bullseye Ranges includes the unadjusted trial
ID: 2374876 • Letter: T
Question
The following six-column table for Bullseye Ranges includes the unadjusted trial balance as of
December 31, 2005.
Problem 4-6AA
Preparing adjusting, reversing, and
next period entries
P4 BULLSEYE RANGES
December 31, 2005
Unadjusted
Trial
Account Title Adjustments Adjusted Trail Balance
Dr. Cr. Dr. Cr. Dr Cr.
Cash . . . . . . . . . . . . . . . . . . . . . $ 13,000
Accounts receivable . . . . . . . . . . 0
Supplies . . . . . . . . . . . . . . . . . . 5,500
Equipment . . . . . . . . . . . . . . . . 130,000
Accumulated depreciation%u2014
Equipment . . . . . . . . . . . . . . . $ 25,000
Interest payable . . . . . . . . . . . . . 0
Salaries payable . . . . . . . . . . . . . 0
Unearned member fees . . . . . . . 14,000
Notes payable . . . . . . . . . . . . . . 50,000
T. Allen, Capital . . . . . . . . . . . . . 58,250
T. Allen, Withdrawals . . . . . . . . . 20,000
Member fees earned . . . . . . . . . 53,000
Depreciation expense%u2014
Equipment . . . . . . . . . . . . . . . 0
Salaries expense . . . . . . . . . . . . 28,000
Interest expense . . . . . . . . . . . . 3,750
Supplies expense . . . . . . . . . . . . 0
Totals . . . . . . . . . . . . . . . . . . . . $200,250 $200,250
Required
1. Complete the six-column table by entering adjustments that reflect the following information:
a. As of December 31, 2005, employees had earned $900 of unpaid and unrecorded salaries. The
next payday is January 4, at which time $1,600 of salaries will be paid.
b. The cost of supplies still available at December 31, 2005, is $2,700.
c. The notes payable requires an interest payment to be made every three months. The amount
of unrecorded accrued interest at December 31, 2005, is $1,250. The next interest payment,
at an amount of $1,500, is due on January 15, 2006.
d. Analysis of the unearned member fees account shows $5,600 remaining unearned at December
31, 2005.
e. In addition to the member fees included in the revenue account balance, the company has earned
another $9,100 in unrecorded fees that will be collected on January 31, 2006. The company
is also expected to collect $8,000 on that same day for new fees earned in January 2006.
f. Depreciation expense for the year is $12,500.
2. Prepare journal entries for the adjustments entered in the six-column table for part 1.
3. Prepare journal entries to reverse the effects of the adjusting entries that involve accruals.
4. Prepare journal entries to record the cash payments and cash collections described for January.
Explanation / Answer
The rule for reversing entries is: Except for the first year of operations, reverse all adjusting entries that increase an asset or liability account from a zero balance. ============================================================================================================================ a. As of December 31, 2005, employees had earned $900 of unpaid and unrecorded salaries. The next payday is January 4, at which time $1,600 of salaries will be paid .============================================================================================================================ Adjustment =============================================================================================================================Dr Salaries Expense 900 ============================================================================================================================ Cr Salaries Payable 900 ============================================================================================================================ Reversing ============================================================================================================================Dr Salaries Payable 900 Cr Salaries Expense 900 Payment Dr Salaries Expense 1,600 Cr Cash 1,600 ============================================================================================================================== b. The cost of supplies still available at December 31, 2005, is $2,700. ==============================================================================================================================5,500 - 2,700 = 2,800 ==============================================================================================================================Adjusting ==============================================================================================================================Dr Supplies Expense 2,800 ==============================================================================================================================Cr Supplies 2,800 ==============================================================================================================================No reversing c. The notes payable requires an interest payment to be made every three months. The amount of unrecorded accrued interest at December 31, 2005, is $1,250. The next interest payment, at an amount of $1,500, is due on January 15, 2006. ==============================================================================================================================Adjusting ==============================================================================================================================Dr Interest Expense 1,250 ==============================================================================================================================Cr Interest Payable 1,250 ==============================================================================================================================Reversing ==============================================================================================================================Dr Interest Payable 1,250 ==============================================================================================================================Cr Interest 1,250 ==============================================================================================================================Payment ==============================================================================================================================Dr Interest Expense 1,500 ==============================================================================================================================Cr Cash 1,500 ==============================================================================================================================d. Analysis of the unearned member fees account shows $5,600 remaining unearned at December 31, 2005. 14,000 - 5,600 = 8,400 Adjusting ============================================================================================================================================================================================================================================================Dr Unearned Member Fees 8,400 ==============================================================================================================================Cr Member Fees Earned 8,400 ==============================================================================================================================No reversing or payment entries ============================================================================================================================================================================================================================================================e. In addition to the member fees included in the revenue account balance, the company has earned another $9,100 in unrecorded fees that will be collected on January 31, 2006. The company is also expected to collect $8,000 on that same day for new fees earned in January 2006. Adjustment ==============================================================================================================================Dr Accounts Receivable 9,100 ==============================================================================================================================Cr Member Fees Earned 9,100 ==============================================================================================================================Reversing ==============================================================================================================================Dr Member Fees Earned 9,100 ==============================================================================================================================Cr Accounts Receivable ==============================================================================================================================Cash Collection ==============================================================================================================================Dr Cash 17,100 ==============================================================================================================================Cr Member Fees Earned 17,100 ============================================================================================================================================================================================================================================================f. deprecistion for the year is $12,500. Adjustment ==============================================================================================================================Dr Depreciation Expense 12,500 ==============================================================================================================================Cr Accumulated Depreciation 12,500 ==============================================================================================================================No reversing or payment entries