Question

Leslie Baker, an attorney, had the following transactions (among others) during 20X0, her initial year in law practice:
a. On July 1, Baker leased office space for 1 year. The landlord (lessor) insisted on full payment in advance. Prepaid Rent was increased and Cash was decreased by $24,000 on Baker’s books. Similarly, the landlord increased Cash and increased Unearned Rent Revenue.
b. On September 1, Baker received a retainer of $12,000 cash for services to be rendered to her client, a local trucking company, over the succeeding 12 months. Baker increased Cash and Unearned Fee Revenue. The trucking company increased Prepaid Expenses and decreased Cash.
c. As of December 31, Baker had not recorded $500 of unpaid wages earned by her secretary during late December.
d. During November and December, Baker rendered services to another client, a utility company. She had intended to bill the company for $5,400 services through December 31, but failed to do so.

Required
1. For the year ended December 31, 20X0, prepare all adjustments called for by the preceding transactions. Assume that appropriate entries were routinely made for the explicit transactions. However, no adjustments have been made before December 31. For each adjustment, prepare an analysis in the same format used when the adjustment process was explained in the chapter (i.e., the balance sheet equation format). Prepare two adjustments for each transaction, one for Baker and one for the other party to the transaction. In part (c), assume that the secretary uses the accrual basis for her entity.
2. For each transaction, prepare the journal entries for Leslie Baker and the other entities involved.



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  • CreatedFebruary 20, 2015
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