College Accounting 2nd Edition by David Haddock, John Price,Michael Farina

Exercise 1

Recording adjustments for accrued and prepaid expense items and earned income.
On July 31, 2013, after one month of operation, the general ledger of Michael Brady, Consultant, contained the accounts and balances given below.
INSTRUCTIONS
1. Prepare a partial worksheet with the following sections: Trial Balance, Adjustments, and Adjusted Trial Balance. Use the data about the firm's accounts and balances to complete the Trial Balance section.
2. Enter the adjustments described below in the Adjustments section. Identify each adjustment with the appropriate letter.
3. Complete the Adjusted Trial Balance section.
ACCOUNTS AND BALANCES

ADJUSTMENTS
a. On July 31, an inventory of the supplies showed that items costing $580 were on hand.
b. On July 1, the firm paid $9,000 in advance for six months of rent.
c. On July 1, the firm purchased a one-year insurance policy for $1,620.
d. On July 1, the firm paid $360 interest in advance on a four-month note that it issued to the bank.
e. On July 1, the firm purchased office furniture for $12,050. The furniture is expected to have a useful life of seven years and a salvage value of $1,550.
f. On July 1, the firm purchased office equipment for $6,400. The equipment is expected to have a useful life of five years and a salvage value of $1,600.
g. On July 1, the firm issued a three-month, 8 percent note for $7,800.
h. On July 1, the firm received a consulting fee of $4,800 in advance for a one-year period.
Analyze: By what total amount were the expense accounts of the business adjusted?