Study Problem 3-6B on page 155.

(a) Identify Tucker's accrued revenue and accrued expense accounts.

(b) Prepare entries to adjust Tucker's accrued revenue and accrued expense accounts.

(c) Explain the effect of the adjustments on Tucker's net income.

Transcribed Image Text:

At the end of August, the first month of operations, the following selected data were taken from the financial statements of Tucker Jacobs, an attorney: Net income for August Total assets at August 31 Total liabilities at August 31 $112,500 650,000 225,000 425,000 Total owner's equity at August 31 In preparing the financial statements, adiustments for the following data were overlooked: Unbilled fees earned at August 31, $31,900. Depreciation of equipment for August, $7,500. • Accrued wages at August 31, $5,200. Supplies used during August, $3,000. Instructions 1. Journalize the entries to record the omitted adjustments. 2. Determine the correct amount of net income for August and the total assets, liabilities, and owner's equity at August 31. In addition to indicating the corrected amounts, in- dicate the effect of each omitted adjustment by setting up and completing a columnar table similar to the following. The first adjustment is presented as an example. Total Liabilities Net Total Owner's Total Assets Income Equity $650,000 $225,000 $425,000 Reported amounts Corrections: Unbilled fees earned $112,500 +31,900 +31,900 +31,900 Equipment depreciation Accrued wages Supplies used Corrected amounts At the end of August, the first month of operations, the following selected data were taken from the financial statements of Tucker Jacobs, an attorney: Net income for August Total assets at August 31 Total liabilities at August 31 $112,500 650,000 225,000 425,000 Total owner's equity at August 31 In preparing the financial statements, adiustments for the following data were overlooked: Unbilled fees earned at August 31, $31,900. Depreciation of equipment for August, $7,500. • Accrued wages at August 31, $5,200. Supplies used during August, $3,000. Instructions 1. Journalize the entries to record the omitted adjustments. 2. Determine the correct amount of net income for August and the total assets, liabilities, and owner's equity at August 31. In addition to indicating the corrected amounts, in- dicate the effect of each omitted adjustment by setting up and completing a columnar table similar to the following. The first adjustment is presented as an example. Total Liabilities Net Total Owner's Total Assets Income Equity $650,000 $225,000 $425,000 Reported amounts Corrections: Unbilled fees earned $112,500 +31,900 +31,900 +31,900 Equipment depreciation Accrued wages Supplies used Corrected amounts

Answer rating: 100% (QA)

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