The following account balances were taken from the adjusted trial balance for Laser Messenger Service, a delivery service firm, for the fiscal year ended April 30, 2016:

$$\begin{array}{lrlr}\text { Depreciation Expense } & \$ 8,650 & \text { Rent Expense } & \$ 60,000 \\ \text { Fees Earned } & 674,000 & \text { Salaries Expense } & 336,900 \\ \text { Insurance Expense } & 1,500 & \text { Supplies Expense } & 4,100 \\ \text { Miscellaneous Expense } & 3,650 & \text { Utilities Expense } & 41,200\end{array}$$

Prepare an income statement.

On May 31, the following data were accumulated to assist the accountant in preparing the adjusting entries for Oceanside Realty:

• Fees accrued but unbilled at May 31 are $19,750.
• The supplies account balance on May 31 is$12,300. The supplies on hand at May 31 are $4,150.
• Wages accrued but not paid at May 31 are$2,700.
• The unearned rent account balance at May 31 is $9,000, representing the receipt of an advance payment on May 1 of three months’ rent from tenants.
• Depreciation of office equipment is$3,200.

Instructions

1. Journalize the adjusting entries required at May 31.
2. Briefly explain the difference between adjusting entries and entries that would be made to correct errors.

Elliptical Consulting is a consulting firm owned and operated by Jayson Neese. The following end-of-period spreadsheet was prepared for the year ended June 30, 2019:

$$\begin{array}{ccc} \begin{array}{c} \text{Elliptical Consulting}\\ \text{End-of-Period Spreadsheet}\\ \text{For the Year Ended June 30, 2019}\\ \end{array}\\ \hline \begin{array}{rrr} \hspace{140pt}\text{Unadjusted} && \text{Adjusted}\\ \hspace{140pt}\text{Trial Balance} & \hspace{30pt} \text{Adjustments} &\hspace{30pt}\text{Trial Balance} \end{array} \end{array}$$

$$\begin{array}{lrrrrrr} \hline \text{Account Title} & \text{Dr.} & \text{Cr.} & \text{Dr.} & \text{Cr.} & \text{Dr.} & \text{Cr.}\\ \hline \\ \text{ Cash }& 27,000 & & & & 27,000 & \\ \text{ Accounts Receivable }& 53,500 & & & & 53,500 & \\ \text{ Supplies }& 3,000 & & & \text{(a)} 2,100 & 900 & \\ \text{ Office Equipment }& 30,500 & & & & 30,500 & \\ \text{ Accumulated Depreciation }& & 4,500 & & \text{(b)} 1,500 & & 6,000 \\ \text{ Accounts Payable }& & 3,300 & & & & 3,300 \\ \text{ Salaries Payable }& & & & \text{(c)} 375 & & 375 \\ \text{ Jayson Neese, Capital }& & 82,200 & & & & 82,200 \\ \text{ Jayson Neese, Drawing }& 2,000 & & & & 2,000 & \\ \text{ Fees Earned }& & 60,000 & & & & 60,000 \\ \text{ Salary Expense }& 32,000 & & \text{(c)} 375 & & 32,375 & \\ \text{ Supplies Expense }& & & \text{(a)} 2,100 & & 2,100 & \\ \text{ Depreciation Expense }& & & \text{(b)} 1,500 & & 1,500 & \\ \text{ Miscellaneous Expense }& \underline{2000} & \_\_\_\_\_\_\_ & \_\_\_\_\_\_\_ & \_\_\_\_\_\_\_ &\underline{2000} & \_\_\_\_\_\_\_ \\ & \underline{\underline{150,000}} & \underline{\underline{150,000}} & \underline{\underline{3,975}} & \underline{\underline{3,975}} & \underline{\underline{151,875}} & \underline{\underline{151,875}} \end{array}$$

Based on the preceding spreadsheet, prepare an income statement, statement of owner’s equity, and balance sheet for Elliptical Consulting

The wages payable and wages expense accounts at May 31, after adjusting entries have been posted at the end of the first month of operations, are shown in the following T accounts:

$$\begin{array}{c} \textbf{Wages Payable} \end{array}$$

$$\begin{array}{lr|lr} \hline \text{}&&\text{Bal.}&7,175\\ \end{array}$$

$$\begin{array}{c} \textbf{Wages Expense} \end{array}$$

$$\begin{array}{lr|lr} \hline \text{Bal.}&73,250&\text{}&&\\ \end{array}$$

Determine the amount of wages paid during the month.

Milbank Repairs & Service, an electronics repair store, prepared the following unadjusted trial balance at the end of its first year of operations:

$$\begin{array}{cc} \begin{array}{c} \textbf{Milbank Repairs \& Service}\\ \textbf{Unadjusted Trial Balance}\\ \textbf{June 30, 2019}\\ \end{array}\\ \begin{array}{lrr} \hline & \textbf{Debit} & \textbf{Credit}\\ & \textbf{Balances} & \textbf{Balances}\\ \hline \text{Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .} & 10,350\\ \text{Accounts Receivable . . . . . . . . . . . . . . . . .} & 67,500\\ \text{Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . } &16,200\\ \text{Equipment. . . . . . . . . . . . . . . . . . . . . . . . .} & 166,100\\ \text{Accounts Payable . . . . . . . . . . . . . . . . . . . } &&15,750\\ \text{Unearned Fees. . . . . . . . . . . . . . . . . . . . . .} && 18,000\\ \text{Nancy Townes, Capital. . . . . . . . . . . . . . .} && 171,500\\ \text{Nancy Townes, Drawing. . . . . . . . . . . . . . } &13,500\\ \text{Fees Earned. . . . . . . . . . . . . . . . . . . . . . . .} && 294,750\\ \text{Wages Expense . . . . . . . . . . . . . . . . . . . . . } &94,500\\ \text{Rent Expense. . . . . . . . . . . . . . . . . . . . . . .} & 72,000\\ \text{Utilities Expense . . . . . . . . . . . . . . . . . . . .} & 51,750\\ \text{Miscellaneous Expense. . . . . . . . . . . . . . . .} & \underline{8,100} & \_\_\_\_\_\_\_ \\ & \underline{\underline{500,000}} & \underline{\underline{500,000}} \end{array} \end{array}$$

For preparing the adjusting entries, the following data were assembled:

• Fees earned but unbilled on June 30 were $7,380.
• Supplies on hand on June 30 were$2,775.
• Depreciation of equipment was estimated to be $11,000 for the year.
• The balance in unearned fees represented the June 1 receipt in advance for services to be provided. During June,$16,500 of the services were provided.
• Unpaid wages accrued on June 30 were $3,880.

Instructions

1. Journalize the adjusting entries necessary on June 30, 2019.
2. Determine the revenues, expenses, and net income of Milbank Repairs & Service before the adjusting entries.
3. Determine the revenues, expenses, and net income of Milbank Repairs & Service after the adjusting entries.
4. Determine the effect of the adjusting entries on Nancy Townes, Capital.

Apex Systems Co. offers its services to residents in the Seattle area. Selected accounts from the ledger of Apex Systems Co. for the fiscal year ended December 31, 2019, are as follows:

Bart Nesbit, Capital				Bart Nesbit, Drawing
Dec.31	90,000	$\tan .1(2019)$	$1,375,000$	Mar. 31	22,500	Dec 31	90,000
		Dec. 31	355,000	June 30	22,500
				Sept. 30	22,500
				Dec 31	22,500

Prepare a statement of owner's equity for the year.

The balance in the supplies account, before adjustment at the end of the year, is $4,850. Journalize the adjusting entry required if the amount of supplies on hand at the end of the year is$880.

Why are closing entries required at the end of an accounting period?

After the accounts have been adjusted at April 30, the end of the fiscal year, the following balances were taken from the ledger of Nuclear Landscaping Co.:

Particulars	Amount
Felix Godwin, Capital	$ 643,600
Felix Godwin, Drawing	10,500
Fees Earned	356,500
Wages Expense	283,100
Rent Expense	56,000
Supplies Expense	11,500
Miscellaneous Expense	13,000

Journalize the four entries required to close the accounts.

The accountant for Healthy Life Company, a medical services consulting firm, mistakenly omitted adjusting entries for (A) unearned revenue earned during the year ($34,900) and (B) accrued wages ($12,770). Indicate the effect of each error, considered individually, on the income statement for the current year ended July 31. Also indicate the effect of each error on the July 31 balance sheet. Set up a table similar to the following, and record your answers by inserting the dollar amount in the appropriate spaces. Insert a zero if the error does not affect the item.

	Error (A)		Error (B)
	Overstated	Understated	Overstated	Understated
1. Revenue for the year would be	$_______	$ _______	$_______	$ _______
2. Expenses for the year would be	$_______	$ _______	$_______	$ _______
3. Net income for the year would be	$_______	$ _______	$_______	$ _______
4. Assets at July 31 would be	$_______	$ _______	$_______	$ _______
5. Liabilities at July 31 would be	$_______	$ _______	$_______	$ _______
6. Stockholders’ equity at July 31 would be	$_______	$ _______	$_______	$ _______

If the net income for the current year had been $196,400 in Exercise 3-23, what would have been the correct net income if the proper adjusting entries had been made?

The following errors occurred in posting from a two-column journal:

1. A credit of $6,000 to Accounts Payable was not posted.
2. An entry debiting Accounts Receivable and crediting Fees Earned for$5,300 was not posted.
3. A debit of $2,700 to Accounts Payable was posted as a credit.
4. A debit of$480 to Supplies was posted twice.
5. A debit of $3,600 to Cash was posted to Miscellaneous Expense.
6. A credit of$780 to Cash was posted as $870.
7. A debit of$12,620 to Wages Expense was posted as $12,260.

Considering each case individually (i.e., assuming that no other errors had occurred), indicate: ( c ) whether the Debit or Credit column of the trial balance would have the larger total. Answers should be presented in the following form, with error (1) given as an example:

$$\begin{array}{c} &\textbf{(a)}&\textbf{(b)}&\textbf{(c)}\\ \textbf{Error}&\textbf{Out of Balance}&\textbf{Difference}&\textbf{Larger Total}\\ 1.&\text{yes}&{\$6,000}&\text{debit}\\ \end{array}$$

Assume that the entry closing total revenues of $3,190,000 and total expenses of$2,350,000 has been made for the year. At the end of the fiscal year, Teresa Schafer, Capital has a credit balance of $1,885,000 and Teresa Schafer, Drawing has a balance of$770,000. (a) Journalize the entry required to close the Teresa Schafer, Drawing account. (b) Determine the amount of Teresa Schafer, Capital at the end of the period.

After the accounts have been adjusted at October 31 , the end of the fiscal year, the following balances were taken from the ledger of Smart Delivery Services Co.:

$$\begin{array}{lr}\text { Fraser Smart, Capital } & \$ 3,550,000 \\ \text { Fraser Smart, Drawing } & 40,000 \\ \text { Fees Earned } & 1,145,000 \\ \text { Wages Expense } & 740,000 \\ \text { Rent Expense } & 65,000 \\ \text { Supplies Expense } & 14,750 \\ \text { Miscellaneous Expense } & 8,800\end{array}$$

Journalize the four entries required to close the accounts.

Each of the following items is shown in the financial statements of Exxon Mobil Corporation.

1. Accounts payable
2. Cash equivalents
3. Crude oil inventory
4. Equipment
5. Exploration expenses
6. Income taxes payable
7. Investments
8. Long-term debt
9. Marketable securities
10. Notes and loans payable
11. Notes receivable
12. Operating expenses
13. Prepaid taxes
14. Sales
15. Selling expenses

a. Identify the financial statement (balance sheet or income statement) in which each item would appear.