PROBLEM 2B
Pat Okendo started her own consulting firm, Okendo Consulting, on May 1, 2014. The trial balance at
May 31 is as shown below .
OKENDO CONSULTING
Trial Balance
May 31, 2014
Debit Credit
Cash
$ 7,500
Accounts Receivable
3,000
Supplies
2,500
Prepaid Insurance
3,600
Equipment
12,000
Accounts Payable
$ 3,500
Unearned Service Revenue
4,000
Common Stock
19,100
Service Revenue
7,500
Salaries and Wages Expense
4,000
Rent Expense
1,500 ______
$34,100 $34,100
In addition to those accounts listed on the trial balance, the chart of accounts for Okendo Consulting also
contains the following accounts: Accumulated Depreciation—Equipment, Salaries and Wages Payable,
Depreciation Expense, Insurance Expense, Utilities Expense, and Supplies Expense.
Other data:
1. $1,000 of supplies have been used during the month.
2. Utility costs incurred but not paid are $300.
3. The insurance policy is for 3 years.
4. $1,500 of the balance in the Unearned Service Revenue account remains unearned at the end of
the month.
5. Assume May 31 is a Tuesday and employees are paid on Fridays. Okendo Consulting has two
employees that are paid $600 each for a 5-day work week.
6. The equipment has a 5-year life with no salvage value and is being depreciated at $200 per month
for 60 months.
7. Invoices representing $1,500 of services performed during the month have not been recorded as of
May 31.
Instructions:
(a) Prepare the adjusting entries for the month of May.
(b) Prepare an adjusted trial balance at May 31, 2014.
PROBLEM 4-2B
(a)
Date
2014
1. May 31
2.
3.
4.
5.
6.
7.
31
31
31
31
31
31
Account Titles
Debit
Supplies Expense.....................................
Supplies ............................................
1,000
Utilities Expense ......................................
Accounts Payable .............................
300
Insurance Expense...................................
Prepaid Insurance
($3,600 ÷ 36 months) ....................
100
Unearned Service Revenue .....................
Service Revenue ($4,000 – $1,500) ..
2,500
Salaries and Wages Expense ..................
Salaries and Wages Payable
[(2/5 X $600) X 2 employees] .......
480
Depreciation Expense ..............................
Accumulated Depreciation—
Equipment ...................................
200
Accounts Receivable ...............................
Service Revenue ...............................
1,500
Credit
1,000
300
100
2,500
480
200
1,500
(b)
5/31 Bal.
Cash
7,500
5/31 Bal.
5/31 Bal.
Accounts Receivable
5/31 Bal. 3,000
5/31
1,500
5/31 Bal. 4,500
Prepaid Insurance
5/31 Bal. 3,600 5/31
5/31 Bal. 3,500
Equipment
5/31 Bal. 12,000
3,500
300
3,800
Salaries and Wages Payable
5/31
480
5/31 Bal.
480
Unearned Service Revenue
5/31
2,500 5/31 Bal. 4,000
5/31 Bal. 1,500
Common Stock
5/31 Bal. 19,100
Service Revenue
5/31 Bal.
1,000
100
5/31
2,500
5/31
1,500
5/31 Bal. 11,500
Accumulated Depreciation—
Equipment
5/31
200
5/31 Bal.
200
Accounts Payable
5/31 Bal.
5/31
5/31 Bal.
Supplies
2,500 5/31
1,500
7,500
Salaries and Wages Expense
5/31 Bal. 4,000
5/31
480
5/31 Bal. 4,480
Rent Expense
5/31 Bal. 1,500
Depreciation Expense
5/31
200
5/31 Bal.
200
Insurance Expense
5/31
100
5/31 Bal.
100
Utilities Expense
5/31
300
5/31 Bal.
300
Supplies Expense
5/31
1,000
5/31 Bal. 1,000
PROBLEM 4-2B (Continued)
(c)
OKENDO CONSULTING
Adjusted Trial Balance
May 31, 2014
Cash ....................................................................
Accounts Receivable .........................................
Supplies ..............................................................
Prepaid Insurance ..............................................
Equipment ...........................................................
Accumulated Depreciation—
Equipment ........................................................
Accounts Payable...............................................
Salaries and Wages Payable .............................
Unearned Service Revenue ...............................
Common Stock ...................................................
Service Revenue .................................................
Salaries and Wages Expense ............................
Rent Expense ......................................................
Depreciation Expense ........................................
Insurance Expense .............................................
Utilities Expense .................................................
Supplies Expense ...............................................
Debit
$ 7,500
4,500
1,500
3,500
12,000
Credit
$ 200
3,800
480
1,500
19,100
11,500
4,480
1,500
200
100
300
1,000
$36,580
$36,580