Reece Financial Services Co., which specializes in appliance repair services, is owned and operated by Joni Reece

Reece Financial Services Co., which specializes in appliance repair services, is owned and operated by Joni Reece. Reece Financial Services’ accounting clerk prepared the following unadjusted trial balance at July 31, 2019:

Reece Financial Services Co. Unadjusted Trial Balance July 31, 2019 Debit Balances Credit Balances Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,200 Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  34,750 Prepaid Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6,000 Supplies  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,725 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155,750 Accumulated Depreciation—Building. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,850 Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  45,000 Accumulated Depreciation—Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,650 Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,750 Unearned Rent  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,600 Joni Reece, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153,550 Joni Reece, Drawing  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000 Fees Earned. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158,600 Salaries and Wages Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  56,850 Utilities Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,100 Advertising Expense  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,500 Repairs Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,100 Miscellaneous Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     4,025 400,000 400,000

The data needed to determine year-end adjustments are as follows:

• Depreciation of building for the year, $6,400.

• Depreciation of equipment for the year, $2,800.

• Accrued salaries and wages at July 31, $900.

• Unexpired insurance at July 31, $1,500.

• Fees earned but unbilled on July 31, $10,200.

• Supplies on hand at July 31, $615.

• Rent unearned at July 31, $300.

Instructions

1. Journalize the adjusting entries using the following additional accounts: Salaries and Wages Payable, Rent Revenue, Insurance Expense, Depreciation Expense—Building, Depreciation Expense—Equipment, and Supplies Expense.

2. Determine the balances of the accounts affected by the adjusting entries and prepare an adjusted trial balance.

Answer:

1.  2019

 July 31 Depreciation Expense—Building 6,400

Accumulated Depreciation—Building 6,400

Building depreciation.

31 Depreciation Expense—Equipment 2,800

Accumulated Depreciation—Equipment 2,800

Equipment depreciation.

31 Salaries and Wages Expense 900

Salaries and Wages Payable900

Accrued salaries and wages.

31 Insurance Expense4,500

Prepaid Insurance4,500

Insurance expired ($6,000 – $1,500).

31 Accounts Receivable10,200

Fees Earned10,200

Accrued fees earned.

31 Supplies Expense1,110

Supplies1,110

Supplies used ($1,725 – $615).

31 Unearned Rent3,300

Rent Revenue3,300

Rent revenue earned ($3,600 – $300).

2.

Debit Credit

Balances Balances

Cash10,200

Accounts Receivable44,950

Prepaid Insurance1,500

Supplies615

Land50,000

Building155,750

Accumulated Depreciation—Building69,250

Equipment45,000

Accumulated Depreciation—Equipment20,450

Accounts Payable3,750

Unearned Rent300

Salaries and Wages Payable900

Joni Reece, Capital153,550

Joni Reece, Drawing8,000

Fees Earned168,800

Rent Revenue3,300

Salaries and Wages Expense57,750

Utilities Expense14,100

Advertising Expense7,500

Depreciation Expense—Building6,400

Repairs Expense6,100

Insurance Expense4,500

Depreciation Expense—Equipment2,800

Supplies Expense1,110

Miscellaneous Expense4,025

420,300 420,300