EXERCISE 6 – ADJUSTMENT ENTRIES

Please journalize the following adjustments of Air & Sea Travel, Inc., at April 30 and post them to the ledger:

(a) Prepaid rent expired, $1.000.

(b) Supplies used, $300.

(c) Depreciation on furniture, $275.

(d) Accrued salary expense, $950.

(e) Accrued service revenue, $250.

(f) Amount of unearned service revenue that has been earned, $150.

(g) Accrued income tax expense, $540.

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 SOLUTION The Adjusting Process of Air & Sea Travel, Inc.
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Information for Adjustments Adjusting Entries

at April 30, 20X3
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(h) Prepaid rent expired, $1.000. (a) Rent Expense ......................................... 1.000
Prepaid rent ....................................... 1.000
To record rent expense.
(i) Supplies used, $300. (b) Supplies Expense .................................... 300
Supplies ............................................... 300
To record supplies used.
(j) Depreciation on furniture, $275. (c) Depreciation Expense – Furniture ....... 275
Accumulated Depreciation – Furniture 275
To record depreciation on furniture.
(k) Accrued salary expense, $950. (d) Salary Expense ......................................... 950
Salary Payable ..................................... 950
To accrue salary expense.
(l) Accrued service revenue, $250. (e) Accounts Receivable ................................ 250
Service Revenue .................................. 250
To accrue service revenue.
(m) Amount of unearned service revenue that (f) Unearned Service Revenue ...................... 150
has been earned, $150. Service Revenue ................................... 150
To record unearned service revenue that
has been earned.
(n) Accrued income tax expense, $540. (g) Income Tax Expense ................................. 540
Income Tax Payable ............................. 540
To accrue income tax expense.

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 Ledger Accounts
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ASSETS LIABILITIES STOCKHOLDERS’ EQUITY

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Expenses
Common Stock
Cash Prepaid Rent Accounts Payable Rent Expense
Bal. 20.000
Bal. 24.800 3.000 (a) 1.000 Bal. 13.100 (a) 1.000
Bal. 2.000 Bal. 1.000

Furniture Retained Earnings Salary Expense

Accounts Receivable Salary Payable
Bal. 16.500 Bal. 11.250 950
2.250 (d) 950
(e) 250 Bal. 950 (d) 950

Bal. 2.500 Bal. 1.900

Accumulated Dividends
Depreciation – Unearned Service Supplies Expense
Supplies Bal. 3.200
Furniture Revenue
700 (b) 300 (b) 300
(c) 275 (f) 150 450
Bal. 400 Bal. 300
Bal. 275 Bal. 300

Depreciation
Income Tax Payable Expense - Furniture
(g) 540 (c) 275
Bal. 540 Bal. 275

Utilities Expense
Revenue Bal. 400
Service Revenue
7.000 Income Tax
(e) 250 Expense
(f) 150 (g) 540

Bal. 7.400 Bal. 540

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