Logan Miller started her own accounting firm, Miller Accounting, on May 1, 2017. Logan Miller wants to prepare monthly financial statements, so adjusting journal entries are required on May 31. Selected transactions for May follow:
1. $900 of supplies were used during the month.
2. Utilities expense incurred but not yet recorded or paid on May 31, 2017, is $250.
3. Paid cash of $3,600 for a one-year insurance policy on May 1, 2017. The policy came into effect on this date.
4. On May 1, purchased office equipment for $11,400 cash. It is being depreciated at $190 per month for 60 months.
5. On May 1, Logan signs a note payable for $10,000, 6% interest.
6. May 31 is a Wednesday and employees are paid on Fridays. Miller Accounting has two employees, who are paid $920 each for a five-day workweek that ends on Friday.
7. On May 15, received a $1,000 advance cash payment from a client for accounting services expected to be provided in the future. As at May 31, one half of these services had not been performed.
8. Invoices representing $1,700 of services performed during the month of May have not been recorded as at May 31.
Instructions
Prepare adjusting entries for the items above.
TAKING IT FURTHER
On June 4, Logan Miller receives and pays a utility bill for the month of May. Is it necessary to make an adjusting entry for May? Why or why not? If yes, specify the names and types of accounts that need to be adjusted and whether the accounts should be increased or decreased.