Shown below is a tentative income statement after the first year of operations.

Income Statement
December 31
Rental revenue $89,900
Expenses
Salaries and wages expense $22,000
Maintenance expense 8,000
Rent expense 9,200
Utilities expense 5,200
Other expenses 2,000
Total expenses $46,400
Income $43,500

Suppose there are additional transactions shown below, that were not recorded or paid.
(a) The Unearned Rental Revenue account includes $6,300 of revenue to be earned in the next year.
(b) There were additional wages for the last five days of the year amounting to $650.
(c) Maintenance expense excludes $2,300 representing the cost of maintenance supplies during the year
(d) The company estimated additional utilities for the last month amounting to $550.
(e) Depreciation on equipment amounted to $16,000 for the year.
(f) There is interest on a $10,000, one-year, 6 percent note payable dated November 1st of the year. The interest is payable on the maturity date of the note.
(g) The income tax expense is $3,900 and payment of the income tax will be made the following year.

Find an adjusting entry for each transaction. If none is required, explain why. Prepare a corrected income statement for the year, including earnings per share. Assume that 5,000 shares of stock are outstanding all year. Compute the net profit margin based on the corrected information.

Quote:

---

Originally Posted by catengous

Shown below is a tentative income statement after the first year of operations.

Income Statement
December 31
Rental revenue $89,900
Expenses
Salaries and wages expense $22,000
Maintenance expense 8,000
Rent expense 9,200
Utilities expense 5,200
Other expenses 2,000
Total expenses $46,400
Income $43,500

Suppose there are additional transactions shown below, that were not recorded or paid.
(a) The Unearned Rental Revenue account includes $6,300 of revenue to be earned in the next year.
(b) There were additional wages for the last five days of the year amounting to $650.
(c) Maintenance expense excludes $2,300 representing the cost of maintenance supplies during the year
(d) The company estimated additional utilities for the last month amounting to $550.
(e) Depreciation on equipment amounted to $16,000 for the year.
(f) There is interest on a $10,000, one-year, 6 percent note payable dated November 1st of the year. The interest is payable on the maturity date of the note.
(g) The income tax expense is $3,900 and payment of the income tax will be made the following year.

Find an adjusting entry for each transaction. If none is required, explain why. Prepare a corrected income statement for the year, including earnings per share. Assume that 5,000 shares of stock are outstanding all year. Compute the net profit margin based on the corrected information.

---

Nothing is free, do some work and tell us your problems. There is a homework help Board

Is there an accounting entry for C? I am confused by the wording of this? Would I expense 5,700?

II am new to this site. I actually have the same problem as above.. if I show you what I have.. can you correct it? I know there is one entry that should not have a journal entry

C. Debit Maintenance Expense and Credit Maintenance Supplies

Thank You.. here is the rest of my work.. could you check it? There is supposed to be one with no entry.. but I have an entry for all?
a) cash dr. 6300
Unearned revenue cr. 6300
b) wages expense dr. 650
Wages payable cr. 650
c) Maintenance expense dr 5700
Maintenance supplies cr.5700
e) utilities expense dr. 550
Utilities payable cr. 550
f) interest expense dr. 50
Interest payable cr. 50
g) income tax expense dr 3900
Income tax payable cr 3900

A. This one has no entry. The amount has already been recorded in Cash and Unearned Revenue. When the revenue is earned the journal entry will be: Debit Unearned Revenue and Credit Revenue or Earned Revenue

C. The amount should be $2,300

The rest of your entries look correct.