Question

REM Consulting is completing the accounting information processing at the end of the fiscal year, December 31. The following trial balances are available. Accounts Unadjusted Trial Balance Adjusted Trial Balance Debit Credit Debit Credit Cash 13,000 13,000 Accounts Receivable 1,500 1,800 Prepaid Insurance 600 200 Supplies 3,800 3,000 Machines 30,000 30,000 Accumulated Depreciation 12,000 17,500 Wages Payable 900 Unearned Fees 6,700 6,500 Owner’s Capital 24,000 24,000 Owner’s Drawing 4,800 4,800 Fees Earned 25,000 25,500 Wages Expense 14,000 14,900 Depreciation Expense 5,500 Supplies Expense 800 Insurance Expense 400 67,700 67,700 74,400 74,400 Required: a. Reconstruct the adjusting entries. Refer to the Chart of Accounts for exact wording of account titles. b. What is the amount of net income?

Answer 1

Answer:

Net Income              3900

Explanation:

REM Consulting

                     Un adjusted Trial Balance           Adjusted Trial Balance

                                    Debit        Credit               Debit         Credit

Cash                           13,000                             13,000

Accounts Receivable 1,500                                1,800

Prepaid Insurance       600                                  200

Supplies                     3,800                                 3,000

Machines                   30,000                             30,000

Acc. Depreciation                          12,000                                    17,500

Wages Payable                                 900

Unearned Fees                              6,700                                     6,500

Owner’s Capital                               24,000                                24,000

Owner’s Drawing                          4,800                                     4,800

Fees Earned                                  25,000                                   25,500

Wages Expense      14,000                                   14,900

Depreciation Expense 5,500

Supplies Expense       800

Insurance Expense     400                                                                        

Total                             67,700       67,700             74,400             74,400

Adjusting Entries

SR. No                      Accounts                       Debit                   Credit

1)                         Accounts Receivable            300

                                           Sales                                              300

As Sales increase so do the Accounts receivable.

2)                   Insurance Expense                    400

                               Prepaid Insurance                                   400

Insurance expired by $400.

3)              Supplies Expense                        800

                             Supplies                                                  800

Supplies used up by amount $800.

4)             Depreciation Expense                5,500

                     Accumulated Depreciation                          5,500

Depreciation Expense amounts to $ 5,500

5)               Fees Earned                                     200

                     Unearned Fees                                             200

Provided Services for which payment had been collected,

6)                Cash                                             500

                        Fees Earned                                                   500

Received $500 for services provided.

7)             Wages Payable                          900

                                   Cash                                                  900

Paid wages payable to the employee.

REM Consulting

Net income

 Fees Earned  25500

Wages Expense    14,900

Depreciation Expense 5,500

Supplies Expense       800

Insurance Expense     400

Net Income              3900