Exam 3: The Adjusting Process

At 1 January, Smith has $1 200 of supplies on hand. During January, Smith purchases $3 000 worth of new supplies. At the end of the month, a count reveals $500 worth of supplies remaining on the shelves. The adjustment entry needed will include a debit to Supply expense of $3 700.

If an adjusting entry includes a debit to Rent expense, that would indicate that the payment of rent had been previously recorded as a(n)entry.

Hank's Tax Planning Service has a beginning balance in the Supplies account of $800. During the current month, he purchased an additional $2 000 of supplies. At the end of the month, he had $250 of supplies left. The amount of supply expense to be recorded for the month is:

Smith signed a contract with a service provider for security services at a rate of $250 per month for the period of January through June. He will pay the service provider the entire amount at the end of June. Smith makes adjusting entries each month. During the month of February, Smith will record total security services expense of $500.

An adjusting entry that credits Salaries payable is an example of a(n):

Active Education sells tickets in advance for their weekly productions and records the proceeds as Unearned revenue. At the end of each month, they make an adjusting entry to account for the tickets used during the month (Ticket revenue.)At 1 March, the Unearned revenue account had a credit balance of $3 000. During March, they sold 300 tickets at $20 each, and 250 tickets were used during the month. What is the balance in Unearned revenue at the end of March?

Which of the following accounts would NOT be adjusted at the end of an accounting period?

Adjusting entries assign revenues to the period when they are earned and expenses to the period when they are incurred.

Real Losers, a diet magazine, collected $360 000 in subscription revenue in May. Each subscriber will receive an issue of the magazine for each of the next 12 months, beginning with the June issue. The company uses the accrual method of accounting. What is the balance in the Unearned revenue account at the end of December?

At 1 January, Smith has a beginning balance in Unearned revenue of $1 000. During January, he earns $800 of that amount. He also collects $4 000 from a new customer for services to be rendered the following month. As of the end of January, the Unearned revenue account had a balance of $4 800.

How do the adjusting entries differ from other journal entries?