Management Group, Inc., adjusts and closes its books each month

Management Group, Inc., adjusts and closes its books each month.  The trial balance at March 31, 2011 before adjustments is as follows:

Debit    Credit

Cash………………….           26,650
Accounts Receivable…….30,000
Supplies………………         .3,750
Prepaid Advertising…….  .8,400
Equipment…………….      .72,000
Accumulated Depreciation:
Equipment                                     25,000
Unearned Consulting Fees……….. 19,500
Capital Stock………………….           20,000
Retained Earnings………………       26,500
Consulting Fees Earned………….    87,500
Salaries Expense………32,000
Utilities Expense………1,200
Rent Expense…………..4,500      _______
178,500      178,500
======          =======

The following information relates to month-end adjustments:

a. According to contracts, consulting fees received in advance that were earned in March total $13,000.
b. On January 1, 2011, the company paid in advance for 6 months’ advertising in professional journals.
c. At March 31, supplies on hand amount to $1,250.
d. The equipment has an original estimated useful life of 6 years.

Required:

1. Prepare the required adjusting entries in journal form.

2. After the proper adjusting entry is made, what is the balance in the Unearned Consulting Fees account at March 31?

Here’s the SOLUTION

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