1. Calvin and Hobbes are the new owners of Micro Computer Services.

At the end of
August 2020, their first month of ownership, Calvin and Hobbes are trying to prepare
monthly financial statements. They have the following information for the month.

(a) At August 31, Calvin and Hobbes owed employees $800 in salaries that the company will
pay on September 1.

(b) On August 1, Calvin and Hobbes borrowed $30,000 from a local bank on a 15-year note. The
annual interest rate is 10%.

(c) Service revenue unrecorded in August totalled $1,100.

Instructions: Prepare the adjusting entries needed at August 31, 2020.

Micro Computer Services.

Adjustment Journal

Date Description Debit $ Credit $

(a) Salaries expenses 800
08/3 Salaries payable 800
1 (Payable salaries to employee)
(b) Interest expense(30,000*10%)/12 250
08/0 Interest payable 250
1 (Outstanding interest expense)
(c) Account receivable 1,100
Service revenue 1,100
(Accrued revenue has recorded)
2,150 2,150

2. Terry Thomas opens the Green Thumb Lawn Care Company on April 1. At April 30,
the trial balance shows the following balances for selected accounts.

Analysis reveals the following additional data.

(a) Prepaid insurance is the cost of a 2-year insurance policy, effective April 1.

(b) Depreciation on the equipment is $500 per month.

(c) The note payable is dated April 1. It is a 6-month, 12% note.

(d) Seven customers paid for the company’s 6 months’ lawn service package of $600 beginning
in April. The company performed services for these customers in April.

(e) Lawn services provided other customers but not recorded at April 30 totalled $1,500.

Instructions:

Prepare the adjusting entries for the month of April. Show computation.

Adjusting Journal

Date Description Debit $ Credit $

(a) Insurance expenses(3,600/24months) 150
Prepaid Insurance 150
(Prepaid insurance expired for the April)
(b) Depreciation Expense 500
Accumulated 500
Depreciation(Equipment)
(Accumulated Depreciation adjusted)
(c) Interest expense{(20K*12%)/12)} 200
Interest payable 200
(Accrued interest of the month)
(d) Unearned service revenue{(600/6)*7} 700
Service revenue 700
(service revenue earned for the month)
(e) Account receivable 1,500
Service revenue 1,500
(Revenue recorded for Service provided)
3,050 3,050

*Notes:

(a) 3600÷2 = 1800 ÷12= 150

C) For 6 month the rate = 12% And for 1 month the Internet expense = 20,000×12/100

= 2400/6= 400/2= 200.

3. Tony Masasi started his own consulting firm, Masasi Company, on June 1, 2020. The
trial balance at June 30 is shown below.
In addition to those accounts listed on the trial balance, the chart of accounts for Masasi
Company also contains the following accounts and account numbers: No. 158 Accumulated
Depreciation—Office Equipment, No. 212 Salaries Payable, No. 244 Utilities Payable, No. 631
Supplies Expense, No. 711 Depreciation Expense, No. 722 Insurance Expense, and No. 732
Utilities Expense.

Other information:

1. Supplies on hand at June 20 are $600.

2. A utility bill for $150 has not been recorded and will not be paid until next month.

3. The insurance policy is for a year.

4. $2,500 of unearned service revenue has been earned at the end of the month.

5. Salaries of $2,000 are accrued at June 30.

6. The office equipment has a 5 years life with no salvage value. It is being depreciated per
month for 60 months.

6. Invoices representing $1,000 of services performed during the month have not been recorded
as of June 30.

Instructions:

(a) Post the adjusting entries to the journal and ledger accounts.
 Masai Company
Journal
June 30, 2020
Date Description Dr. $ Cr. $
1. Supplies expense (2000-600) 1,400
Supplies 1,400
(Supplies used)
2. Utility expense 150
Utilities payable 150
(Utility expenses has not recorded)
3. Insurance expenses(3000/12) 250
Prepaid insurance 250
( Insurance expense for the month)
4. Unearned revenue 2,500
Service revenue 2,500
(Service revenue earned)
5. Salary Expense 2,000
Salaries Payable 2,000
(Salary accrued at the end of the month)
6. Depreciation Expense(15000/60) 250
Accumulated Depreciation-Office equipment 250
(Unrecorded depreciation)
6. Account receivable 1,000
Service revenue 1,000
(Service revenue has not been recorded)

Ledger
Supplies Account

Date Description Amount $ Date Description Amount $

Balance c/d 1400 Supplies 1400
expense
1400 1400
Balance b/d 1400

Supplies expense Account

Date Description Amount $ Date Description Amount $

Supplies 1400 Balance c/d 1400
1400 1400
Balance b/d 1400
 Utility expense Account

Date Description Amount $ Date Description Amount $

Account 150 Balance c/d 150
payable
150 150
Balance b/d 150

Account payable Account

Date Description Amount $ Date Description Amount $

Balance c/d 150 Utility 150
expense
150 150
Balance b/d 150

Insurance Expense Account

Date Description Amount $ Date Description Amount .$

Prepaid 250 Balance c/d 250
insurance
250 250
Balance 250

Prepaid insurance Account

Date Description Amount $ Date Description Amount $

Balance c/d 250 Supplies 250
expense
250 250
Balance b/d 250

Service revenue Account

Date Description Amount $ Date Description Amount $

Unearned revenue 2500
Account receivable 100
Balance c/d 2600
2600 2600
Balance b/d 2600
 Unearned revenue Account

Date Description Amount $ Date Description Amount $

Service revenue 2500 Balance c/d 2500
2,500 2,500
Balance b/d 2,500

Salary Expense Account

Date Description Amount $ Date Description Amount $

Salaries Payable 2,000 Balance c/d 2,000
2,000 2,000
Balance b/d 2,000

Salaries Payable Account

Date Description Amount $ Date Description Amount $

Balance c/d 2,000 Salary Expense 2,000
2,000 2,000
Balance b/d 2,000

Account receivable Account

Date Description Amount $ Date Description Amount $

Service revenue 1000 Balance c/d 1000
1000 1000
Balance b/d 1000

Depreciated Expense

Date Description Amount $ Date Description Amount $

Accumulated 250 Balance c/d 250
Depreciation
250 250
Balance b/d 250

Accumulated Depreciation

Date Description Amount $ Date Description Amount $

Balance c/d 250 Depreciated Expense 250
250 250
Balance b/d 250
 (b) Prepare an adjusted trial balance at June 30, 2020.

Trial Balance

June 30, 2020

Unadjusted Adjustments Adjusted Trial

Trial Balance Balance
AC Description Dr. $ Cr. $ Dr. Cr. Dr. Cr.
no.
101 Cash 7,150 7,150
112 Account receivable 6,000 1,000 7,000
126 Supplies 2,000 1400 600
130 Prepaid insurance 3,000 250 2750
157 Office Equipment 15,000 15000
201 Account payable 4,500 4,500
209 Unearned service 4,000 2,500 1,500
revenue
301 T Masasi capital 21,750 21750
400 Service revenue 7,900 2,500+1000 11,400
726 Salaries expenses 4,000 2000 6000
729 Rent expenses 1,000 1000
ADJUSTMENTS:
631 Supplies expense 1400 1400
244 Utilities expense 150 150
722 Insurance expense 250 250
212 Salaries Payable 2000 2000
158 Accumulated 250 250
Depreciation
711 Depreciation 250 250
Expense
732 Utilities payable 150 150
Total 38,150 38,150 7,550 7,550 41,550 41,550