Exam 3: Adjusting the Accounts

On July 1, Runner's Sports Store paid $14,000 to Corona Realty for 4 months rent beginning July 1. Prepaid Rent was debited for the full amount. If financial statements are prepared on July 31, the adjusting entry to be made by Runner's Sports Store is

Expenses incurred but not yet paid or recorded are called

On Friday of each week, Spoon Company pays its factory personnel weekly wages amounting to $45,000 for a five-day work week. Instructions (a) Prepare the necessary adjusting entry at year end, assuming December 31 falls on Wednesday. (b) Prepare the journal entry for payment of the week's wages on the payday which is Friday, January 2 of the next year.

The expense recognition principle requires that efforts be matched with accomplishments.

A contra asset account is subtracted from a related account in the balance sheet.

For prepaid expense adjusting entries

A liability-revenue account relationship exists with an unearned rent revenue adjusting entry.

Fugazi City College sold season tickets for the 2018 football season for $240,000. A total of 8 games will be played during September, October and November. In September, two games were played. In October, three games were played. The balance in Unearned Ticket Revenue at October 31 is

If a business has received cash in advance of services performed and credits a liability account, the adjusting entry needed after the services are performed will be

Accrued expenses are

An adjusted trial balance

Which of the following statements concerning accrual-basis accounting is incorrect?

Prepare the required end-of-period adjusting entries for each independent case listed below. Case 1 Sleater-Kinney Company began the year with a $3,000 balance in the Supplies account. During the year, $8,500 worth of additional supplies were purchased. A physical count of supplies on hand at the end of the year revealed that $7,400 worth of supplies had been used during the year. No adjusting entry has been made until year end. Case 2 Western Company has a calendar year-end accounting period. On July 1, the company purchased equipment for $30,000. It is estimated that the equipment will depreciate $300 each month. No adjusting entry has been made until year end. Case 3 Ranch Realty is in the business of renting several apartment buildings and prepares monthly financial statements. It has been determined that 3 tenants in $900 per month apartments and one tenant in the $1,200 per month apartment had not paid their August rent as of August 31st.

On June 1, during its first month of operations, Crooked Rain purchased supplies for $4,500 and debited the supplies account for that amount. At June 30, an inventory of supplies showed $1,000 of supplies on hand. What adjusting journal entry should be made for June?

On January 1, 2018, Bottle Rockets Corp. purchased a general liability insurance policy for $9,000 to provide coverage for the calendar year. 1. If the company recorded the policy as an asset when purchased, what is the monthly adjusting journal entry that should be recorded at January 31, 2018? *2. If the company expensed the cost of the policy on January 1, 2018, what is the monthly adjusting entry that should be recorded at January 31, 2018?

A law firm received $3,000 cash for legal services to be rendered in the future. The full amount was credited to the liability account Unearned Service Revenue. If the legal services have been rendered at the end of the accounting period and no adjusting entry is made, this would cause

Buffalo Tom Cruises purchased a five-year insurance policy for its ships on April 1, 2018 for $60,000. Assuming that April 1 is the effective date of the policy, the adjusting entry on December 31, 2018 is a. Prepaid Insurance 9,000 Insurance Expense 9,000 b. Insurance Expense 9,000 Prepaid Insurance 9,000 c. Insurance Expense 12,000 Prepaid Insurance 12,000 d. Insurance Expense 3,000 Prepaid Insurance 3,000

SurferRosa Music Store borrowed $30,000 from the bank signing a 9%, 3-month note on September 1. Principal and interest are payable to the bank on December 1. If the company prepares monthly financial statements, the adjusting entry that the company should make for interest on September 30, would be

The cash basis of accounting is not in accordance with generally accepted accounting principles.

Fugazi City College sold season tickets for the 2018 football season for $240,000. A total of 8 games will be played during September, October and November. Assuming all the games are played, the Unearned Ticket Revenue balance that will be reported on the December 31 balance sheet will be