End-Of-Period Adjustments - Selected Computations
Allied Architects Adjusts Its Books

question 34

Essay

End-of-period adjustments - selected computations
Allied Architects adjusts its books each month and closes its books at the end of the year. The trial balance at January 31, 2010, before adjustments is as follows:
$\begin{array}{lr}&\text { Debit }& \text { Credit }\\\text { Cash } & \$ 39,645 \\\text { Accounts Receivable } & 27,000 \\\text { Supplies } & 3,375 \\\text { Prepaid Advertising } & 7,560 \\\text { Equipment } & 64,800\\\text { Accumulated Depreciation: Equipment } && \$ 22,500 \\\text { Unearned Consulting Fees } && 17,550 \\\text { Income Taxes Payable } & &15,840 \\\text { Share Capital } && 18,000 \\\text { Retained Earnings } && 23,850 \\\text { Consulting Fees Earned } && 78,570\\\text { Salaries Expense } & 28,800 \\\text { Utilities Expense } & 1,080 \\\text { Rent Expense } & 4,050 \\&\$ 176,310&\$176,310\end{array}$
The following information relates to month-end adjustments:
(a) According to contracts, consulting fees received in advance that were earned in January total $13,500.
(b) On November 1, 2009, the company paid in advance for 5 months' advertising in professional journals.
(c) At January 31, supplies on hand amount to $2,250.
(d) The equipment has an original estimated useful life of 4 years.
(e) The corporation is subject to income taxes of 25% of taxable income. (Assume taxable income is the same as "income before taxes.")
1) After the proper adjusting entry is made, what is the balarice in the Unearned Consultirng Fees accourt at Jaruary 31 ? $\quad$$\quad$ $ $\underline{\quad\quad}$
2) Compute the amount to be reported in the Jaruary income statennent for the following:
Advertising Expense $\quad$$\quad$ $ $\underline{\quad\quad}$
Supplies Expense $\quad$$\quad$$\quad$ $ $\underline{\quad\quad}$
3) What is the book value of the quiprnent at Jaruary 31 after the proper adjusting entry is Recorded? $\quad$$\quad$$\quad$$\quad$ $ $\underline{\quad\quad}$
4) Using the above infornation, compute the arnount of profit or loss to be shown in the Jaruary income statement Profit for Jaruary $\quad$$\quad$ $ $\underline{\quad\quad}$

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