Answer:
1. Journalize the adjusting entries necessary on April 30. 2019.
Dr Supplies expense 5,820
Cr Supplies 5,820
Dr Accounts receivable 3,900
Cr Earned fees 3,900
Dr Depreciation expense 3,000
Cr Accumulated depreciation 3,000
Dr Wages expense 2,475
Cr Wages payable 2,475
2. Determine the revenues, expenses, and net income of Crazy Mountain Outfitters before the adjusting entries.
unadjusted income statement
Fees Earned $305,800
Wages Expense ($157,800
)
Rent Expense ($55,000
)
Utilities Expense ($42,000
)
<u>Miscellaneous Expense ($7,000)</u>
Net income $44,000
3. Determine the revenues, expense, and net income of Crazy Mountain Outfitters after the adjusting entries.
adjusted income statement
Fees Earned $309,700
Wages Expense ($160,275
)
Rent Expense ($55,000
)
Utilities Expense ($42,000
)
Depreciation expense ($3,000)
<u>Miscellaneous Expense ($12,820)</u>
Net income $36,605
4. Determine the effect of the adjusting entries on Retained Earnings.
Since net income decreases after the adjusting entries, retained earnings will also decrease. Retained earnings are increased by the amount of net income.
