Answer:
(a) Supplies of $400 are on hand. Supplies account shows $1,600 balance.
Supplies (asset account) are overstated and supplies expense (expense account) is understated. Adjusting journal entry:
Dr Supplies expense 1,200
Cr Supplies 1,200
(b) Services performed but unbilled total $700.
Both service revenue (revenue account) and accounts receivable (asset account) are understated. Adjusting journal entry:
Dr Accounts receivable 700
Cr Service revenue 700
(c) Interest of $300 has accumulated on a note payable.
Interest expense (expense account) and interest payable (liability account) are both understated. Adjusting journal entry:
Dr Interest expense 300
Cr Interest payable 300
(d) Rent collected in advance totaling $1,100 has been earned.
Unearned revenue (liability account) is overstated, while rental revenue (revenue account) is understated. Adjusting journal entry:
Dr Unearned revenue 1,100
Dr Rental revenue 1,100
