Problem - Adjusting Entries
Econo Company, an electronics repair store, prepared the unadjusted trial balance shown below at the end of its first year of operations.
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Econo Company Unadjusted Trial Balance April 30, 2012
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Debit
Balances
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Credit
Balances
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Cash
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12,380
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Accounts Receivable
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82,230
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Supplies
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19,810
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Equipment
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418,290
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Accounts Payable
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19,320
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Unearned Fees
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21,800
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Capital Stock
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55,000
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Retained Earnings
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233,000
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Dividends
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16,350
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Fees Earned
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495,360
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Wages Expense
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114,920
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Rent Expense
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87,680
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Utilities Expense
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62,910
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Miscellaneous Expense
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9,910
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824,480
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824,480
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For preparing the adjusting entries, the following data were assembled:
a. Fees earned but unbilled on April 30 were $8,960.
b. Supplies on hand on April 30 were $7,320.
c. Depreciation of equipment was estimated to be $12,380 for the year.
d. The balance in unearned fees represented the April 1 receipt in advance for services to be provided. Only $17,220 of the services was provided between April 1 and April 30.
e. Unpaid wages accrued on April 30 were $1,580.
Required:
Determine the revenues, expenses, and net income of Econo Company after the adjusting entries.
Determine the effect on retained earnings of the adjusting entries.