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Exam 3: Adjusting Accounts and Preparing Financial Statements

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Question 41

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The adjusted trial balance contains information pertaining to:

A) Asset accounts only.
B) Balance sheet accounts only.
C) Income statement accounts only.
D) All general ledger accounts.
E) Revenue accounts only.

F) B) and E)
G) All of the above

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Question 42

Multiple Choice

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On January 1,Southwest College received $1,200,000 in Unearned Tuition Revenue from its students for the spring semester,which spans four months beginning on January 2.What amount of tuition revenue should the college recognize on January 31?

A) $300,000.
B) $600,000.
C) $800,000.
D) $900,000.
E) $1,200,000.

F) None of the above
G) C) and E)

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Question 43

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Salvo Co.had the following transactions in the last two months of its year ended December 31.Prepare entries for these transactions under the method that records prepaid expenses as expenses and records unearned revenues as revenues.Also prepare adjusting entries at the end of the year.

PPW Co.leased a portion of its store to another company for eight months beginning on October 1,at a monthly rate of $800.This other company paid the entire $6,400 cash on October 1,which PPW Co.recorded as unearned revenue.The journal entry made by PPW Co.at year-end on December 31 would include:

It is acceptable to record prepayment of expenses as debits to expense accounts.

On May 1,Giltus Advertising Company received $1,500 from Julie Bee for advertising services to be completed April 30 of the following year.The Cash receipt was recorded as unearned fees and at year-end on December 31,$1,000 of the fees had been earned.The adjusting entry on December 31 would include:

Manning,Co.collected 6-months' rent in advance from a tenant on November 1 of the current year.When it collected the cash,it recorded the following entry:

On January 1,Alco Company purchases manufacturing equipment costing $95,000 that is expected to have a five-year life and an estimated salvage value of $5,000.Alco uses the straight-line depreciation method to allocate costs.The adjusting entry needed on December 31 is:

The adjusting entry to record an accrued revenue is:

Explain the purpose of adjusting entries at the end of a period.

What is the proper adjusting entry at December 31,the end of the accounting period,if the balance in the prepaid insurance account is $7,750 before adjustment,and the unexpired amount per analysis of policies is,$3,250?

The accrual basis of accounting reflects the principle that revenue is recorded when it is earned,not when cash is received.

A fiscal year refers to an organization's accounting period that spans twelve consecutive months or 52 weeks.

Adjusting is a three-step process (1)_________________,(2)___________________,and (3)_______________________.

Costs incurred during an accounting period but unpaid and unrecorded are accrued expenses.

Western Company had $500 of store supplies available at the beginning of the current year.During the year Western Company purchased $2,750 worth of store supplies.On December 31 of this year $375 worth of store supplies remained. a.Calculate the amount of Western Company's store supplies expense for the current year.(Show your calculations.) b.Prepare the journal entry to adjust the supplies account.

The unadjusted trial balance and the adjustment data for Harris Training Institute are given below along with adjusting entry information.What is the impact of the adjusting entries on the balance sheet? Show calculation for total assets,total liabilities,and owner's equity without the adjustments; show calculation for total assets,total liabilities,and owner's equity with the adjustments.Which one gives the most accurate presentation of the balance sheet? Additional information items: a.The Prepaid Insurance account consists of a payment for a 1 year policy.An analysis of the insurance invoice indicates that one half of the policy has expired by the end of the December 31 year-end. b.A cash payment for space sublet for 8 months was received on July 1 and was credited to Unearned Rent. c.Accrued interest expense on the note payable of $1,000 has been incurred but not paid.

Asset and liability balances are transferred from the adjusted trial balance to the income statement.

What is an adjusted trial balance? Why is it prepared?

A company pays each of its two office employees each Friday at the rate of $100 per day for a five-day week that begins on Monday.If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday,the month-end adjusting entry to record the salaries earned but unpaid is: