Exam 3: The Adjusting Process

On November 15, Great Designs Company purchased an advertising campaign for the month of December. Great Designs paid cash of $2,700 in advance. The advertising campaign ran in December and was completed on December 31.​ (a) Prepare all necessary journal entries for the advertising campaign for November and December .(b) Explain why you prepared this/these journal entries.

If the adjustment for depreciation for the year is inadvertently omitted, the assets on the balance sheet at the end of the period will be understated.

Match the type of account (a - e) with the business transactions that follow. -Services provided that have not been recorded. A)Prepaid expense B)Accrued expense C)Unearned revenue D)Accrued revenue E)None of these

Match the type of account (a - e) with the business transactions that follow. -Retainer fee received from a client for future legal representation. A)Prepaid expense B)Accrued expense C)Unearned revenue D)Accrued revenue E)None of these

Prepaid rent, representing rent for the next six months' occupancy, would be reported on the tenant's balance sheet as a(n)

The term used to describe an expense that has not been paid and has not yet been recognized in the accounts by a routine entry is

The account type and normal balance of Prepaid Expense is

Identify the effect (a - h) that omitting each of the following items would have on the balance sheet.a.Assets and stockholders' equity overstated b.Assets and stockholders' equity understated c.Assets overstated and stockholders' equity understated d.Assets understated and stockholders' equity overstated e.Liabilities and stockholders' equity overstated f.Liabilities and stockholders' equity understated g.Liabilities overstated and stockholders' equity understated h.Liabilities understated and stockholders' equity overstated -Property taxes are paid annually. The estimated monthly amount for the taxes was not recorded.

Adjusting journal entries are dated on the last day of the period.

The net income reported on the income statement is $58,000. However, adjusting entries have not been made at the end of the period for supplies expense of $2,200 and accrued salaries of $1,300. Net income, as corrected, is

The adjusting entry to adjust supplies was omitted at the end of the year. This would affect the income statement by having

Prepare adjusting entries for the following transactions: (a)The beginning balance of the supplies account was $245. During the month the company bought additional supplies in the amount of $735. At the end of the month a physical inventory showed $343 of unused supplies.(b)The company has a 12% note payable in the amount of $17,000 due in 6 months. The interest expense of $170 for the month has not been recorded.(c)The company has two employees. The manager is paid on the 15th of every month for work performed during the first half of the month and on the 1st of the following month for the work performed during the second half of the month. His monthly salary is $5,500. The other employee is paid $650 for each 5-day work week (Monday - Friday). The last day of the month fell on Thursday.(d)The unearned fees account shows a balance of $46,000. According to the manager 60% of that amount has been earned.(e)At the end of the month $5,700 of services had been performed but not yet billed.

The type of account and normal balance of Prepaid Insurance is

The matching principle

At the end of April, the first month of the company's year, the usual adjusting entry transferring rent earned to a revenue account from the unearned rent account was omitted. Indicate which items will be incorrectly stated, because of the error, on (a) the income statement for April and (b) the balance sheet as of April 30. Also indicate whether the items in error will be overstated or understated.

Data for an adjusting entry described as "accrued taxes, $950" requires a

At the end of the fiscal year, the usual adjusting entry to prepaid insurance to record expired insurance was omitted. Which of the following statements is true?

Adjusting entries affect only expense and asset accounts.

Match the type of account (a - e) with the business transactions that follow. -Provided tutoring for a student that will be invoiced next month. A)Prepaid expense B)Accrued expense C)Unearned revenue D)Accrued revenue E)None of these

Accrued expenses are ordinarily reported on the balance sheet as