Exam 3: The Adjusting Process

Which of the following entries would be recorded by a company that uses the cash basis method of accounting?

List and briefly discuss three accounting concepts and principles that apply to accrual basis accounting.

Which of the following accounting terms assumes that a business's activities can be divided into small segments and that financial statements can be prepared for specific periods, such as a month, quarter, or year?

Unearned Revenue is classified as a(n) ________ account.

Russin Tax Planning Service bought computer equipment for $24,000 on January 1, 2016. It has an estimated useful life of four years and zero residual value. Russin uses the straight-line method to calculate depreciation and records depreciation expense in the books at the end of every month. Calculate the amount of Depreciation Expense for the period, January 1, 2016 through September 30, 2016, for this equipment. (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)

On January 1, 2016, Prepaid Insurance of Maywood Company had a beginning balance of $900. Three months of insurance premiums remain in the beginning balance. On February 1, 2016, the company paid an annual insurance premium in the amount of $3,400 for the period beginning April 1. On February 28, 2016, the balance in Prepaid Insurance is $600. The deferred expense was initially recorded as an asset.

Adjusting entries may involve any account, including Cash.

Kostner Financial Services performed accounting services for a client in December. A bill was mailed to the client on December 30. The company received the client's check by mail on January 5. Which of the following accounts should appear on the income statement for the year ended December 31 as related to the services performed?

Salaries are $4,500 per week for five working days and are paid weekly at the end of the day Fridays. The end of the month falls on a Thursday. The accountant for Dayton Company made the appropriate accrual adjustment and posted it to the ledger. The balance of Salaries Payable, as shown on the adjusted trial balance, will be a ________. (Assume that there was no beginning balance in the Salaries Payable account.)

Paramount Event Planning Services collects fees from its customers in advance. On January 1, 2017, the balance of its Unearned Revenue account was $6,000 (CR). During January and February, the company collected $3,000 and $800 as advance fees. During the two-month period, it performed services of $7,500 related to the deferred revenue. What is the balance in Unearned Revenue at the end of February?

The worksheet is NOT a journal, a ledger, or a financial statement.

The Accumulated Depreciation account is ________.

Mason Painting Services has a weekly payroll of $30,000. December 31 falls on Wednesday and Mason will pay its employees the following Monday (January 5) for the previous full week. Assume that Mason has a five-day workweek and has an unadjusted balance in Salaries Expense of $800,000. What amount should be debited to Salaries Expense on December 31?

The employees of Sinclair Services Company worked the last two weeks of December. They received their paychecks on January 2. Which of the following accounts should appear on the balance sheet as of December 31?

The entry to record depreciation includes a debit to the ________.

The expected value of a depreciable asset at the end of its useful life is called ________.

The major difference between a cash basis accounting system and an accrual basis accounting system is the timing of recording revenues and assets.

Magnolia Tree Service has a weekly payroll of $50,000. December 31, 2016 falls on Thursday and Magnolia will pay its employees the following Monday (January 4, 2017) for the previous full week. Assume that Magnolia has a five-day workweek and has an unadjusted balance in Salaries Expense of $845,000. Prepare the December 31, 2016 adjusting entry.

The following Office Supplies account information is available for Able Company: From the above information, calculate the amount of office supplies purchased.