Enter the following column headings across the top of a sheet of paper:

Enter the transaction or adjustment letter in the first column and show the effect, if any, of the transaction entry or adjusting entry on the appropriate balance sheet category or on the income statement by entering the amount and indicating whether it is an addition (+) or a subtraction (−). Column headings reflect the expanded balance sheet equation; items that affect net income should not be shown as affecting stockholders’ equity. In some cases, only one column may be affected because all the specific accounts affected by the transaction are included in that category. Transaction a has been completed as an illustration.

a. Provided services to a client on account; revenues totaled $1,600.
b. Paid an insurance premium of $1,800 for the coming year. An asset, Prepaid Insurance, was debited.
c. Recognized insurance expense for one month from the premium transaction in b via a reclassification adjusting entry.
d. Paid $2,900 of wages accrued at the end of the prior month.
e. Paid $7,200 of wages for the current month.
f. Accrued $2,600 of wages at the end of the current month.
g. Received cash of $4,100 on accounts receivable accrued at the end of the prior month.

Transcribed Image Text:

Transaction/ Adjustment Assets Liabilities Stockholders' Equity Net Income