Jake’s Computer Repair Service was profitable in February 20x1 and continued to operate in March 20x1. The ending balances for assets, liabilities, and the capital account of Jake’s Computer Repair Service on February 28, 20x1 are listed here. These account balances are also the beginning balances for March 20x1.
The following transactions occurred during March 20x1:
a. March 1, 20x1. Purchased supplies (on account): $640
b. March 4, 20x1. Service revenues for the first week of March: $1,420 (cash)
c. March 18, 20x1. Received cash from customers on accounts receivable: $1,600
d. March 25, 20x1. Paid interest expense on note payable: $120
e. March 31, 20x1. Service revenues for the rest of March: $5,680 ($5,000 cash, $680 on account)
f. March 31, 20x1. Paid rent: $500
g. March 31, 20x1. The cash payment for wages totaled $1,100. The journal entry includes debit to the wages payable account.
h. March 31, 20x1. Jake withdrew $2,000 in cash from the business for personal use.
Requirement 1 Journalize the transactions occurring during March, 20x1. The first transaction has been journalized and posted to the related ledger account.
Accounts Payable a $640
To record purchase of supplies a 3/4/x1
Service revenue b 1420
Account receivable c 1600
cash c 1600
Interest expense d 120
Notes payable d 120
Accounts receivable e 680
cash e 5000
Service revenue e 5680
Rent Expense f 500
cash f 500
Wages expense g 1070
cash g 1100
Wages payable g 30
Cash drawing jones h 2000
cash h 2000
Post the journal entries made for March 31, 20x1, to the appropriate T-accounts. Use the journal entries for March 31 made in Requirement 2. All other entries have been posted.
Use the following unadjusted trial balance for Jake’s Computer Repair Service as on March 31, 20x1, to check the ending balances you computed for Requirement 2 above.
Jake makes adjusting entries for the following items:
Supplies costing $100 remain on hand at March 31, 20x1.
The balance on the prepaid advertising expense account is $1,000 on March 31, 20x1. The amount represents five months of advertising services. Jake must make an adjustment to recognize advertising expense for March 20x1.
The utilities bill is received. The amount is still due at month end: $610.
The unearned revenue balance was $120 as of March 1, 20x1. Jake has since performed the required computer repair services for the customer.
An interest of $120 is accrued on the note payable for March 20x1. The amount is payable as of March 31, 20x1.
Use the accounting worksheet given on the following page to make the necessary adjusting entries and to compute the adjusted trial balance, income statement, and balance sheet amounts. Key the adjustments by transaction letter.
Requirement 3, continued JAKE’S COMPUTER REPAIR SERVICE
MONTH ENDED MARCH 20x1
Adjusted Trial Balance