Problem described some adjustments made by Susan Hatfield, CPA. Prepare the necessary adjustment as it would be made by the client in transactions (2) and (3), and by the secretary in transaction (4). For our purposes, assume that the secretary keeps personal books on the accrual basis.
In Problem Susan Hatfield, certified public accountant, had the following transactions (among others) during 20X0:
1. For accurate measurement of performance and position, Hatfield uses the accrual basis of accounting. On August 1, she acquired office supplies for $3,000. Office Supplies Inventory was increased, and Cash was decreased by $3,000 on Hatfield’s books. On December 31, her inventory of office supplies was $1,300.
2. On August 1, a client gave Hatfield a retainer fee of $48,000 cash for monthly services to be rendered over the following 12 months. Hatfield increased Cash and Unearned Fee Revenue.
3. Hatfield accepted an $8,000 note receivable from a client on October 1 for tax services. The note plus interest of 6% per year was due in 6 months. Hatfield increased Note Receivable and Fee Revenue by $8,000 on October 1.
4. As of December 31, Hatfield had not recorded $800 of unpaid wages earned by her secretary during late December.