Refer to the information provided for Matlock Graphic Arts Studio in Problem 4-6A.
Required
1. Prepare a table to summarize the required adjusting entries as they affect the accounting equation. Use the format in Exhibit 3-1 on page 109. Identify each adjustment by letter.
2. Compute the net increase or decrease in net income for the month from the recognition of the adjusting entries you prepared in part (1). (Ignore income taxes.)
Problem 4-6A:
Lori Matlock operates a graphic arts business. A trial balance on June 30, 2014, before recording any adjusting entries, appears as follows:
Other Data;
a. The monthly rent is $600.
b. Supplies on hand on June 30, 2014, amount to $1,290.
c. The office equipment was purchased on June 1, 2013. On that date, it had an estimated useful life of ten years and a salvage value of $6,120.
d. Interest owed on the note payable but not yet paid amounts to $50.
e. Salaries of $620 are owed but unpaid to employees at the end of the month.
Required
1. Prepare in general journal form the necessary adjusting entries at June 30, 2014. Label the entries (a) through (e) to correspond to the other data.
2. Note that the unadjusted trial balance reports a credit balance in Accumulated Depreciation—Equipment of $4,000. Explain why the account contains a balance of $4,000 on June 30, 2014.