Crazy Mountain Outfitters Co., an outfitter store for fishing treks, prepared the following unadjusted trial balance at the end of its first year of operations:

Crazy Mountain Outfitters Co., an outfitter store for fishing treks, prepared the following unadjusted trial balance at the end of its first year of operations:

Crazy Mountain Outfitters Co. Unadjusted Trial Balance April 30, 2019 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,400 Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,600 Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,200 Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112,000 Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,200 Unearned Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,200 John Bridger, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137,800 John Bridger, Drawing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 Fees Earned. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305,800 Wages Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157,800 Rent Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,000 Utilities Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,000 Miscellaneous Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000

For preparing the adjusting entries, the following data were assembled:

• Supplies on hand on April 30 were $1,380.

• Fees earned but unbilled on April 30 were $3,900.

• Depreciation of equipment was estimated to be $3,000 for the year.

• Unpaid wages accrued on April 30 were $2,475.

• The balance in unearned fees represented the April 1 receipt in advance for services to be provided. Only $14,140 of the services was provided between April 1 and April 30.

Instructions

1. Journalize the adjusting entries necessary on April 30, 2019.

2. Determine the revenues, expenses, and net income of Crazy Mountain Outfitters Co. before the adjusting entries.

3. Determine the revenues, expenses, and net income of Crazy Mountain Outfitters Co. after the adjusting entries. 

4. Determine the effect of the adjusting entries on John Bridger, Capital. 

Answer:

1.  2019

 Apr. 30 Supplies Expense5,820         

Supplies5,820         

Supplies used ($7,200 – $1,380).

30 Accounts Receivable3,900         

Fees Earned3,900         

Accrued fees earned.

30 Depreciation Expense3,000         

Accumulated Depreciation—Equipment 3,000         

Equipment depreciation.

30 Wages Expense2,475         

Wages Payable2,475         

Accrued wages.

30 Unearned Fees14,140       

Fees Earned14,140       

Fees earned.

2. Revenues................................. $305,800

Expenses................................. 261,800 ($157,800 + $55,000 + $42,000 + $7,000)

Net Income................................. $ 44,000

3. Revenues................................. $323,840 ($305,800 + $3,900 + $14,140)

Expenses................................. 273,095 ($261,800 + $5,820 + $3,000 + $2,475)

Net Income................................. $ 50,745

4. The effect of the adjusting entries on John Bridger, Capital is the difference

in net income in (3) and (2) of $6,745 ($50,745 – $44,000), which would increase

John Bridger, Capital.