Milbank Repairs & Service, an electronics repair store, prepared the following unadjusted trial balance at the end of its first year of operations: Milbank Repairs & Service UNADJUSTED TRIAL BALANCE June 30, 2019 ACCOUNT TITLE DEBIT CREDIT 1 Cash 10,150.00 2 Accounts Receivable 67,550.00 3 Supplies 16,590.00 4 Equipment 112,610.00 5 Accounts Payable 15,540.00 6 Unearned Fees 18,360.00 7 Nancy Townes, Capital 120,650.00 8 Nancy Townes, Drawing 13,540.00 9 Fees Earned 291,750.00 10 Wages Expense 94,050.00 11 Rent Expense 72,120.00 12 Utilities Expense 51,730.00 13 Miscellaneous Expense 7,960.00 14 Totals 446,300.00 446,300.00 For preparing the adjusting entries, the following data were assembled: • Fees earned but unbilled on June 30 were $10,310. • Supplies on hand on June 30 were $4,550. • Depreciation of equipment was estimated to be $6,180 for the year. • The balance in unearned fees represented the June 1 receipt in advance for services to be provided. During June, $15,030 of the services were provided. • Unpaid wages accrued on June 30 were $5,070. Required: 1. Journalize the adjusting entries necessary on June 30, 2019. Refer to the Chart of Accounts for exact wording of account titles. 2. Determine the revenues, expenses, and net income of Milbank Repairs & Service before the adjusting entries. 3. Determine the revenues, expenses, and net income of Milbank Repairs & Service after the adjusting entries. 4. Determine the effect of the adjusting entries on Nancy Townes, Capital. 1. Journalize the adjusting entries necessary on June 30, 2019. PAGE 10 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 Adjusting Entries 2 3 4 5 6 7 8 9 10 11 CHART OF ACCOUNTS Milbank Repairs & Service General Ledger ASSETS 11 Cash 12 Accounts Receivable 13 Supplies 14 Equipment 15 Accumulated Depreciation-Equipment LIABILITIES 21 Accounts Payable 22 Wages Payable 23 Unearned Fees EQUITY 31 Nancy Townes, Capital 32 Nancy Townes, Drawing 33 Dividends REVENUE 41 Fees Earned EXPENSES 51 Wages Expense 52 Rent Expense 53 Supplies Expense 54 Depreciation Expense 56 Utilities Expense 59 Miscellaneous Expense
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
ACCOUNT TITLE | DEBIT | CREDIT | |
---|---|---|---|
1
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Cash
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10,150.00
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2
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67,550.00
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3
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Supplies
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16,590.00
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4
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Equipment
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112,610.00
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5
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Accounts Payable
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15,540.00
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6
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Unearned Fees
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18,360.00
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7
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Nancy Townes, Capital
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120,650.00
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8
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Nancy Townes, Drawing
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13,540.00
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9
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Fees Earned
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291,750.00
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10
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Wages Expense
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94,050.00
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11
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Rent Expense
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72,120.00
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12
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Utilities Expense
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51,730.00
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13
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Miscellaneous Expense
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7,960.00
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14
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Totals
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446,300.00
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446,300.00
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• | Fees earned but unbilled on June 30 were $10,310. |
• | Supplies on hand on June 30 were $4,550. |
• | |
• | The balance in unearned fees represented the June 1 receipt in advance for services to be provided. During June, $15,030 of the services were provided. |
• | Unpaid wages accrued on June 30 were $5,070. |
Required: | |
1. | Journalize the adjusting entries necessary on June 30, 2019. Refer to the Chart of Accounts for exact wording of account titles. |
2. | Determine the revenues, expenses, and net income of Milbank Repairs & Service before the adjusting entries. |
3. | Determine the revenues, expenses, and net income of Milbank Repairs & Service after the adjusting entries. |
4. | Determine the effect of the adjusting entries on Nancy Townes, Capital. |
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
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CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||
Milbank Repairs & Service | |||||||||||||||||||||||||||||||||||||||||||||||
General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||
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