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Exam 5: Adjustments and the Worksheet

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Question 21

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On October 1, 2013, Jay Walker Company purchased a one-year insurance policy for $660. The correct adjusting entry on December 31, 2013, is

A) debit Insurance Expense $660; credit Prepaid Insurance $660
B) debit Insurance Expense $495; credit Prepaid Insurance $495
C) debit Prepaid Insurance $55; credit Insurance Expense $55
D) debit Insurance Expense $165; credit Prepaid Insurance $165

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

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Question 22

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A(n) ____________________ is prepared at the end of each accounting period to organize and summarize the data needed for the preparation of the financial statements.

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Question 23

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The process of allocating the cost of a long-term asset as an expense of operations during the asset's expected useful life is known as ____________________.

The statement of owner's equity is prepared from the data in the Income Statement section of the worksheet.

On a worksheet, the adjusted balance of the Prepaid Rent account is extended to the:

Read the description of following adjustments that are required at the end of the accounting period for Hubbard Repair Services. Determine the account and amount to be debited and the account and amount to be credited. A. Prepaid rent for the year on April 1, 2013. Rent expired during the month of April 2013, $3,500. Record the adjustment on April 30, 2013. B. Purchased supplies for $2,000 on April 1, 2013. Inventory of supplies was $1,600 on April 30, 2013. Record the adjustment for the amount of the supplies that were used during the month of April 2013. C. Depreciation is computed using the straight-line method. Equipment purchased on April 1, 2013, for $18,000 has an estimated useful life of 5 years with no salvage value. Record the adjustment on April 30, 2013. D. Signed a 6-month contract for $2,400 of prepaid advertising on April 1, 2013. Record the adjustment for the amount of the contract that expired during the month of April 2013.

Read the description of following adjustments that are required at the end of the accounting period for Drake Consulting Services. Determine the account and amount to be debited and the account and amount to be credited. A. Prepaid rent for the year on January 1, 2013. Rent expired during the month of January 2013, $7,000. Record the adjustment on January 31, 2013. B. Purchased supplies for $1,600 on January 1, 2013. Inventory of supplies was $600 on January 30, 2013. Record the adjustment for the amount of the supplies that were used during the month of January 2013. C. Depreciation is computed using the straight-line method. Equipment purchased on January 1, 2013, for $36,000 has an estimated useful life of 5 years with no salvage value. Record the adjustment on January 31, 2013. D. Signed a 12-month contract for $2,400 of prepaid advertising on January 1, 2013. Record the adjustment for the amount of the advertising contract that expired during the month of January 2013.

If adjustments are entered on a worksheet, it is not necessary to record them in the journal or the ledger.

Read the description of following adjustments that are required at the end of the accounting period for Riley Furniture Restoration. Determine the account and amount to be debited and the account and amount to be credited. A. Purchased supplies for $1,000 on June 1, 2013. Inventory of supplies was $300 on June 30, 2013. Record the adjustment for the amount of the supplies that were used during the month of June 2013. B. Signed a 4-month contract for $1,200 of prepaid advertising on June 1, 2013. Record the adjustment for the amount of the advertising contract that expired during the month of June 2013. C. Prepaid rent for the year on June 1, 2013. Rent expired during the month of June 2013, $700. Record the adjustment on June 30, 2013. D. Depreciation is computed using the straight-line method. Equipment purchased on June 1, 2013, for $16,800 has an estimated useful life of 5 years with no salvage value. Record the adjustment on June 30, 2013.

Read the description of following adjustments that are required at the end of the accounting period for Anise's Repair Services. Record the necessary adjusting entries on page 2 of a general journal. Omit the descriptions. A. Prepaid rent for the year on January 1, 2013. Rent expired during the month of January 2013, $1,600. B. Purchased supplies for $4,000 on January 1, 2013. Inventory of supplies was $1,200 on January 30, 2013. C. Depreciation is computed using the straight-line method. Equipment purchased on January 1, 2013, for $3,000 has an estimated useful life of 5 years with no salvage value. D. Signed a 3-month contract for $450 of prepaid advertising on January 1, 2013.

The Supplies account had a balance of $1,200 when a physical count indicated that supplies on hand totaled $400. This means that supplies in the amount of ____________________ were used during the accounting period.

Match the accounting terms with the description by entering the proper number.

Which of the following entries records the depreciation on equipment for the fiscal year-end adjustment?

Read each of the following transactions for Pickerton Printer Repair Services. Determine the accounts to be debited and credited in the necessary end-of-April adjustments. A. On April 1, 2013, Pickerton Printer Repair Services, a new firm, bought supplies for $2,500. The $2,500 was debited to the Supplies account. An inventory of supplies at the end of June showed that supplies costing $1,500 were on hand. B. On April 1, 2013, the firm bought equipment costing $20,000. The equipment has an expected useful life of 10 years and no salvage value. The firm will use the straight-line method of depreciation. C. On April 1, 2013, the firm paid $7,200 rent in advance for a six-month period. The $7,200 was debited to the Prepaid Rent account.

The partial worksheet for the Marion Consulting Services for the month ended January 31, 2013, is shown below. Using this data, prepare an income statement, a statement of owner's equity, and a balance sheet. The owner made no additional investments during the month.

On a worksheet, the adjusted balance of Supplies is extended from the Adjusted Trial Balance Debit column to the ____________________ Debit column.

The book value of long-term assets is reported on

The difference between the debit balance of the Equipment account and the credit balance of the Accumulated Depreciation-Equipment account is called the ____________________ of an asset.

On a worksheet, the adjusted balance of the Depreciation Expense account is extended to:

The process of updating accounts at the end of an accounting period for previously unrecorded items that belong to the period is referred to as making ____________________.