ACC 290 Week 3

Transactions that affect earnings do not necessarily affect cash.
Identify the effect, if any, that each of the following transactions would have upon cash and net income. The first transaction has been completed as an example. (If an amount has a decreasing effect use either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45). Do not use a dollar sign $ for negative answers.)
Nick Waege started his own consulting firm, Waegelein Consulting, on June 1, 2010. The trial balance at June 30 is as follows.

Trial Balance
June 30, 2010
Debit   Credit
Cash    $6,850
Accounts Receivable  7,000
Prepaid Insurance       2,640
Supplies          2,000
Office Equipment       15,000
Accounts Payable                   $4,540
Unearned Service Revenue                5,200
Common Stock                       21,750
Service Revenue                     8,000
Salaries Expense        4,000
Rent Expense  2,000
$39,490           $39,490
Other data:
1          Supplies on hand at June 30 total $980.
2.         A utility bill for $180 has not been recorded and will not be paid until next month.
3.         The insurance policy is for a year.
4.         $3,900 of unearned service revenue has been earned at the end of the month.
5.         Salaries of $1,250 are accrued at June 30.
6.         The office equipment has a 5-year life with no salvage value and is being depreciated at $250 per month for 60 months.
7.         Invoices representing $3,500 of services performed during the month have not been recorded as of June 30.
Prepare the adjusting entries for the month of June.
Post the adjusting entries to the ledger accounts. Enter the totals from the trial balance as beginning account balances. Use T-Accounts. (List multiple items from largest to smallest amount, e.g. 10, 5, 2.)
Complete the following adjusted trial balance at June 30, 2010. (If answer is zero, please enter 0, do not leave any fields blank.)
The Olathe Hotel opened for business on May 1, 2010. Here is its trial balance before adjustment on May 31.

Trial Balance
May 31, 2010
Debit   Credit
Cash    $2,500
Prepaid Insurance       1,800
Supplies          2,600
Land    15,000
Lodge  70,000
Furniture         16,800
Accounts Payable                   $4,700
Unearned Rent Revenue                     3,300
Mortgage Payable                  36,000
Common Stock                       60,000
Rent Revenue             9,000
Salaries Expense        3,000
Utilities Expense        800
Advertising Expense  500
$113,000         $113,000
Other data:
1.         Insurance expires at the rate of $300 per month.
2.         A count of supplies shows $1,050 of unused supplies on May 31.
3.         Annual depreciation is $3,600 on the lodge and $3,000 on furniture.
4.         The mortgage interest rate is 7%. (The mortgage was taken out on May 1.)
5.         Unearned rent of $2,500 has been earned.
6.         Salaries of $750 are accrued and unpaid at May 31.

Prepare a ledger using T accounts. Enter the trial balance amounts and post the adjusting entries.