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BT12203 BUSINESS ACCOUNTING CHAPTER 3: THE ADJUSTING PROCESS TUTORIAL QUESTIONS EX 3-1: Classify the following items as (a) accrued revenue, (b) accrued expense, (c) unearned revenue, or (d) prepaid expense: 1. 2. 3. 4. 5. 6. 7.

Bill for ads that appeared in prior month's local newspaper. Fees received but not yet earned. Fees earned but not yet received. Premium paid on a one-year insurance policy. Rent received in advance for rental of office space. Rent paid in advance. Wages owed but payable in the following period.

PR 3-5A: Pitman Company is a small editorial services company owned and operated by Jan Pitman. On October 31, 2019 the end of the current year, Pitman Company's accounting clerk prepared the following unadjusted trial balance:

The data needed to determine year-end adjustments are as follows: a) b) c) d) e) f) g)

Unexpired insurance as at October 31, $600. Supplies on hand as at October 31, $675. Depreciation of building for the year, $12,000. Depreciation of equipment for the year, $8,600. Unearned rent as at October 31, $2,250. Accrued salaries and wages, $2,800. Fees earned but unbilled, $10,050.

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. ST 3.18: The trial balance for Amy Enterprise for the year ended 31 December 2019 is as follows:

Amy Enterprise Trial balance as at 31 December 2019 Account Cash Accounts receivable Notes receivable Inventory Prepaid rental Equipment Accumulated depreciation – equipment Accounts payable Capital, Amy Sales Cost of goods sold Wages expenses Miscellaneous expenses Income tax Total

Debit (RM) 4,200 20,000 10,000 24,000 2,400 18,000

Credit (RM)

4,000 26,400 33,200 176,000 92,000 40,000 24,000 5,000 239,600

239,600

Additional information: (a) (b) (c) (d) (e) (f) (g)

Accrued interest on notes receivable is RM1,000. Depreciation on the equipment is RM2,000. Accrued wages is RM1,200. Accrued utilities is RM800 (charged to miscellaneous account). Rental which is due is RM1,000. Cash drawings by Amy is RM2,800. Cash of RM400 is received from a customer for a debt which was wrongly credited to the trade payables.

Instructions: 1. Prepare adjusting journal entries for transactions (a)-(g). 2. Prepare the adjusted trial balance as at 31 December 2019. 3. Prepare the income statement and statement of changes in equity for the year ended 31 December 2019. 4. Prepare the balance sheet as at 31 December 2019....