Exam 3: Adjusting Accounts for Financial Statements

What is a 'flow' as it relates to financial statements?

Use the following adjusted trial balance for Andersen Corporation to answer Exercises below -Use Andersen's adjusted trial balance to prepare the company's income statement.

When adjusting for depreciation, which of the following is one effect of the adjustment?

Purrfect Pet provides pet grooming and boarding services for domestic cats. The company has been in existence for 12 years. At December 31, 2016, Purrfect Pet's adjusted trial balance is as follows: A. Prepare closing entries in journal entry form. B. After Purrfect Pet's closing entries are posted, what is the balance in the Retained Earnings account? C. Prepare Purrfect Pet's post-closing trial balance.

On January 18, 2016, Sunflower Co. paid $48,960 for a two-year insurance premium that covers February 1, 2016 through January 31, 2018. Sunflower's year end is March 31, 2016. A. What entry is made on January 18, 2016? B. What adjusting entry should be made on March 31, 2016 before the financial statements are prepared for the year ending March 31, 2016?

Badger Bagels had the following separate situations occur during 2016.The company's accountant is preparing the annual financial statements at December 31, 2016 and has asked you to prepare the adjusting entries for each situation using the financial statement effects template. a. On June 1, 2016, Badger Bagels paid the annual lease amount on its warehouse space. The annual lease is $26,400 and was recorded by debiting Prepaid Rent and crediting Cash. No adjusting entries have been prepared since June 1, 2016. b. The Unearned Revenue account has an unadjusted balance of $8,000 consisting of gift cards sold to customers. Redeemed gift cards that have not yet been recorded total $4,800. c. The company has not yet received a bill or paid for utilities for the month of December. The expense is estimated to be $3,360 d. On December 1, 2016, Badger Bagels received $6,000 cash from a customer related to a special order. The special order was delivered to the customer on December 29 but no entry has been made to record the delivery. e. At December 31, 2016, employee wages of $9,200 have been incurred but not paid or recorded. f. At December 31, 2016, $1,760 of interest has been incurred, but not yet paid or recorded. g. Unrecorded depreciation on equipment is $11,200.

Use the following adjusted trial balance for Andersen Corporation to answer Exercises below -Use Andersen's adjusted trial balance to prepare Andersen's statement of stockholders' equity for 2016. There were no stock issuances or repurchases during 2016.

Andrew's Aviation earns 3% annual interest on its $84,000 of investments. Interest is paid every six months on June 30 and December 31. A. If monthly financial statements are prepared, what adjusting entry should be made on January 31? B. What effect on the January 31 balance sheet does the adjusting entry have?

On January 1, 2016, the first month of the fiscal year, the Gift Certificates account had a credit balance of $9,000. During January, customers purchased an added $85,200 worth of gift certificates. As of January 31, 2016, $13,600 of certificates were unredeemed. A. How will the adjustment gift certificates redeemed affect the income statement for the month ending January 31, 2016? B. How will the adjustment gift certificates redeemed affect the balance sheet prepared at January 31, 2016?

Swim Clean offers pool and spa cleaning services to hotels and residential customers. Commercial (hotels) customers pay on a monthly contract basis, while residential customers pay an hourly rate based on services provided. In July 2016, Swim Clean signed a 6-month contract with Holiday Hotels to provide pool and spa cleaning services for 3 hotel sites. The contract price of $168,000 was collected on July 1, 2016. The services will be provided evenly over the 6 months. During July 2016, Swim Clean also provided 80 hours of residential pool services at $64 per hour. These services have not yet been billed to residential customers. The company uses the account, Fees Receivable, to reflect amounts due but not yet billed.

Below are several accounts from Denison Company's accounting records. Columns representing the accounting equation appear to the right of each transaction listed below. Next to each transaction in the column of the respective account classification, write the 1) name of each account, 2) the dollar amount by which each account increases or decreases, and 3) either debit or credit to indicate the effect on the account, for each of the adjustments necessary at the end of May 2016. The company records adjustments monthly.

Kramer's Kitchen sells pre-packaged meals to consumers. During 2016, the company purchased inventory on account at a cost of $16,920,000. The following T-accounts reflect information contained in the company's 2016 and 2015 balance sheets. A. Prepare the journal entry, using the financial statement effects template and in journal entry form, to record Kramer's Kitchen's purchases during 2016. B. How much will Kramer's Kitchen report at December 31, 2016 on its balance sheet for inventory? For Accounts Payable? C. How much will Kramer's Kitchen report for the year ending December 31, 2016 on its income statement as Cost of Goods Sold?

A company's fiscal year may:

Winter South is a national grocery chain. Selected balance sheet data follows: A. During its year ending June 31, 2016, Winter South purchased on account, $2,442,278 thousand of inventory for sale in its stores. Prepare the entry, using the financial statement effects template and in journal entry form, to record cost of goods sold for the year ended June 31, 2016. B. What amount of cash did Winter South pay to its suppliers during its year ending June 31, 2016?

The chart of accounts is also known as the book of original entry.

Andrew's Aviation pays employees each Friday for the five day work-week ending on that day. Ignoring taxes and other withholdings, the company's normal gross weekly payroll is $28,800. If the last Friday of the month falls on January 25, what adjusting entry should be made on January 31, the fiscal year end?

Spirit Corp. has been in operation since January, 2001. Selected T-account balances for Spirit Corp. are shown below as of January 31, 2016. Adjusting entries have already been posted. The firm uses a calendar-year accounting period but prepares monthly adjustments.

Magic Corporation has the following normal account balances in its general ledger at the end of a period: Sales revenue $ 1,060,000 Advertising expense 180,000 Which of the following gives the correct entry required to close only the accounts above?

A company provides services to clients during the period that are neither paid for, nor billed to the clients. What must the company do?

Why would a company want to have a fiscal year-end that does not match the calendar year-end?