The following are the balances in the accounts for Joan Miller Advertising Agency as of January 31, 2010: Totals $14,660 14,660 During the month of February, the agency engaged in the following transactions: Feb. 1 Received an additional investment of cash from Joan Miller, $6,000. Feb. 2 Purchased additional office equipment with cash, $800. Feb. 5 Received art equipment transferred to the business from Joan Miller, $1,400. Feb. 6 Purchased additional office supplies with cash, $80 Feb. 7 Purchased additional art supplies on credit from Taylor Supply Company, $500. Feb. 8 Completed the series of advertisements for Marsh Tire Company that began on January 31, and billed Marsh Tire Company for the total services performed, including the accrued revenues that had been recognized in January of $200 (see accounts receivable). The total bill is $800. Feb. 9 Paid the secretary for two weeks\' wages, $600. Feb. 12 Paid the amount due to Morgan Equipment for the office equipment purchased last month $1,500 Feb. 13 Accepted an advance fee in cash for artwork to be done for another agency, $1,800. Feb. 14 Purchased a copier from Morgan Equipment for $2,100, paying $250 in cash and agreeing to pay the rest in equal payments over the next five months. Feb. 15 Performed advertising services and accepted a cash fee, $1,050. Feb. 16 Received payment on account from Ward Department Stores for services performed last month, $2,800. Feb. 19 Paid amount due for the telephone bill that was received and recorded at the end of January , $70. Feb. 20 Performed advertising services for Ward Department Stores and agreed to accept payment next month, $3,200. Feb. 21 Performed art services for a cash fee, $580. Feb. 22 Received and paid the utility bill for February, $110. Paid the secretary for two weeks\' wages, $600. Feb. 26 Paid the rent for March in advance, $400. Feb. 27 Received the telephone bill for February, which is to be paid next month, $80. Feb. 28 Paid out cash to Joan Miller as a withdrawal for personal living expenses, $1,400. At the end of February, adjustments are made for the following: a. One month\'s prepaid rent has expired. b. One month\'s prepaid insurance has expired, $40. c. An inventory of art supplies reveals $720 of supplies are still on hand on February 28th. d. An inventory of office supplies reveals $300 in office supplies have been used in February. e. Depreciation on the Art equipment for February is calculated to be $90. f. Depreciation on the Office equipment for February is calculated to be $100. g. Art services performed for which payment has been received in advance total $1,400 h. Advertising services performed that will not be billed until March total $340. i. Three days\' worth of secretarial wages had accrued by the end of February. Required 1. Prepare the general journal entries the transactions completed in February 2010 and the general journal entires the adjustments neccessary at the end of February. 2. T-Account for the .

1. The following are the balances in the accounts for Joan Miller Advertising Agency as of January
31, 2010:
Totals $14,660 14,660
During the month of February, the agency engaged in the following transactions:
Feb. 1 Received an additional investment of cash from Joan Miller, $6,000.
Feb. 2 Purchased additional office equipment with cash, $800.
Feb. 5 Received art equipment transferred to the business from Joan Miller, $1,400.
Feb. 6 Purchased additional office supplies with cash, $80
Feb. 7 Purchased additional art supplies on credit from Taylor Supply Company, $500.
Feb. 8 Completed the series of advertisements for Marsh Tire Company that began on January
31, and billed Marsh Tire Company for the total services performed, including the accrued
revenues that had been recognized in January of $200 (see accounts receivable). The total bill is
$800.
Feb. 9 Paid the secretary for two weeks' wages, $600.
Feb. 12 Paid the amount due to Morgan Equipment for the office equipment purchased last
month $1,500
Feb. 13 Accepted an advance fee in cash for artwork to be done for another agency, $1,800.
Feb. 14 Purchased a copier from Morgan Equipment for $2,100, paying $250 in cash and
agreeing to pay the rest in equal payments over the next five months.
Feb. 15 Performed advertising services and accepted a cash fee, $1,050.
Feb. 16 Received payment on account from Ward Department Stores for services performed last
month, $2,800.
Feb. 19 Paid amount due for the telephone bill that was received and recorded at the end of
January , $70.
Feb. 20 Performed advertising services for Ward Department Stores and agreed to accept
payment next month, $3,200.
Feb. 21 Performed art services for a cash fee, $580.
Feb. 22 Received and paid the utility bill for February, $110. Paid the secretary for two weeks'
wages, $600.
Feb. 26 Paid the rent for March in advance, $400.
Feb. 27 Received the telephone bill for February, which is to be paid next month, $80.
Feb. 28 Paid out cash to Joan Miller as a withdrawal for personal living expenses, $1,400.
At the end of February, adjustments are made for the following:
a. One month's prepaid rent has expired.
b. One month's prepaid insurance has expired, $40.

2. c. An inventory of art supplies reveals $720 of supplies are still on hand on February 28th.
d. An inventory of office supplies reveals $300 in office supplies have been used in February.
e. Depreciation on the Art equipment for February is calculated to be $90.
f. Depreciation on the Office equipment for February is calculated to be $100.
g. Art services performed for which payment has been received in advance total $1,400
h. Advertising services performed that will not be billed until March total $340.
i. Three days' worth of secretarial wages had accrued by the end of February.
Required
1. Prepare the general journal entries the transactions completed in February 2010 and the
general journal entires the adjustments neccessary at the end of February.
2. T-Account for the month of February.DebitCreditCash1720Accounts Receivable3000Art
Supplies1300Office Supplies600Prepaid Rent440Prepaid Insurance440Art
Equipment4200Accumulated Depreciation--Art eq70Office Equipment3000Accumulated
Depreciation--Office eq50Accounts Payable3170Unearned Art Fees600Wages Payable180Joan
Miller, Captial10590
Solution
Answer: 1
Adjusted Entries
Art Supplies Expense (+E, -SE)
a
500
Office Supplies Expense (+E, -SE)
a
200
Supplies (-A)
a
700
Supplies used in January
Depreciation Expense, Art Equipment (+E, -SE)
b
70
Accumulated Depreciation, Art Equipment (+XA, -A)
b
70

3. ((4,200-0) x (1/5))/12 months = $70 per month of depreciation
Depreciation Expense, Office Equipment (+E, -SE)
c
50
Accumulated Depreciation, Office Equipment (+XA, -A)
c
50
((3,000-600) x (1/4))/12 months = $50 per month of depreciation
Unearned Art Fees (-L)
d
400
Art Fees Earned (+R, +SE)
d
400
To recognize revenue earned
01/31/10
Accounts Receivable (+A)
e
200
Advertising Fees Earned(+R, +SE)
e
200
To record revenue earned but not paid
01/31/10
Office Wage Expense (+E, -SE)
f
180
Wages Payable (+L)
f
180
Wage expense is increased (debited) because this expense was incurred in January at $60 x
3days. A liability (wages payable) is credited because this amount is owed to the employee.
1/31/10
Rent Expense (+E,-SE)
400
Prepaid Rent (-A)

4. 400
To recognize Rent Expense for January of $400 and Prepaid Rent account now reflects $400 of
rent paid in advance for February.
1/31/10
Insurance Expense (+E, -SE)
40
Prepaid Insurance (-A)
40
To reflect one month paid of insurance $480/12 months = $40
Check the amounts for Art Supplies Expense and Unearned Art Fees.
Also, you need adjusting entries for prepaid rent and prepaid insurance because you always
consider you "prepaid" accounts when doing adjusting entries.
Answer:2
T-Accounts
Assets
Accounts Receivable
2,800
End. Balance 2,800
Cash
10,000
800
4,200
1,500
480
1,000
1,400
600
1,000
1,400
1,000
600
100
End. balance 2720
Prepaid Rent
800
End. Balance 800

5. Art Equipment
4,200
End. Balance 4,200
Office Equipment
3,000
End. Balance 3,000
Office supplies
800
End. Balance 800
Art supplies
1,800
End. Balance 1,800
Prepaid Insurance
480
End. Balance 480
Liabilities
Short term notes payable
1,500
End. Balance 1,500
Accounts Payable
2,600
1,000
70
End. Balance 1,670
Unearned Revenue
1,000
End. Balance 1,000
Stockholder’s Equity
Services Revenue
1,400
2,800
End. Balance 4,200
Wages Expense
600
600
End. Balance 1,200

6. Joan Miller, withdrawls
1,400
End. Balance 1,400
Utilities Expense
100
End. Balance 100
Telephone Expense
70
End. Balance 70
Journal Entry
Paid $600 salary
15-Jan
Cash (+A)
1,000
Unearned Revenue (+L)
1,000
Received advance fee for service
19-Jan
Accounts Receivable (+A)
2,800
Service Revenue (+L)
2,800
Performed service for $2,800 fee to be collected next month
25-Jan
Joan Miller, Withdrawals (+E, -SE)
1,400
Cash (-A)
1,400
Withdraw $1,400 for personal living expenses
26-Jan
Wage Expense (+E, -SE)
600
Cash (-A)
600
Paid $600 salary
29-Jan

7. Utility Expense (+E, -SE)
100
Cash (-A)
100
Paid $100 utility bill
30-Jan
Telephone Expense (+E, -SE)
70
Accounts payable (+L)
70
Received $70 telephone bill
Art Supplies Expense (+E, -SE)
a
500
Office Supplies Expense (+E, -SE)
a
200
Supplies (-A)
a
700
Supplies used in January
Depreciation Expense, Art Equipment (+E, -SE)
b
70
Accumulated Depreciation, Art Equipment (+XA, -A)
b
70
((4,200-0) x (1/5))/12 months = $70 per month of depreciation
Depreciation Expense, Office Equipment (+E, -SE)
c
50
Accumulated Depreciation, Office Equipment (+XA, -A)
c
50
((3,000-600) x (1/4))/12 months = $50 per month of depreciation
Unearned Art Fees (-L)

8. d
400
Art Fees Earned (+R, +SE)
d
400
To recognize revenue earned
01/31/10
Accounts Receivable (+A)
e
200
Advertising Fees Earned(+R, +SE)
e
200
To record revenue earned but not paid
01/31/10
Office Wage Expense (+E, -SE)
f
180
Wages Payable (+L)
f
180
Wage expense is increased (debited) because this expense was incurred in January at $60 x
3days. A liability (wages payable) is credited because this amount is owed to the employee.
1/31/10
Rent Expense (+E,-SE)
400
Prepaid Rent (-A)
400
To recognize Rent Expense for January of $400 and Prepaid Rent account now reflects $400 of
rent paid in advance for February.
1/31/10
Insurance Expense (+E, -SE)
40
Prepaid Insurance (-A)
40
To reflect one month paid of insurance $480/12 months = $40