Exam 3: Adjusting Accounts for Financial Statements

Use the following information to answer questions below On the last day of December 2016, Camrey's Trucks entered into a transaction that resulted in a receipt of $216,000 cash in advance related to services that will be provided during January 2017. During December of 2016, the company also performed $128,000 of services which were neither billed nor paid. Prior to December adjustments and before these two transactions were recorded, the company's trial balance showed service revenue of $1,165,470 at December 31, 2016. There are no other prepaid services yet to be delivered, and during the month all outstanding accounts receivable from prior months were collected. -If Camrey's Trucks makes the appropriate adjusting entry, how much will service revenue will be reflected on the December 31, 2016 income statement?

Adjusting entries always impact the income statement and the cash account.

An adjusted trial balance is a listing of all the year-end balance sheet accounts, since all the income statement accounts have been closed to zero.

Packer Wings Company received an advance payment of $144,000 for a consulting contract during the year. The balance in the Unearned Consulting Fees account at the beginning of the year was $12,000. At the end of the year, $8,000 was still unearned. Create T-accounts for the accounts involved in the adjusting entry needed at year end, and post all amounts to them, including the adjusting entry necessary, and calculate the account balances. How much will Packer Wings report as Consulting Revenue on its income statement for the year?

The chart of accounts is a tabular record in which business activities are analyzed in terms of debits and credits and recorded in chronological order.

Use the following information to answer questions below On the last day of December 2016, Camrey's Trucks entered into a transaction that resulted in a receipt of $216,000 cash in advance related to services that will be provided during January 2017. During December of 2016, the company also performed $128,000 of services which were neither billed nor paid. Prior to December adjustments and before these two transactions were recorded, the company's trial balance showed service revenue of $1,165,470 at December 31, 2016. There are no other prepaid services yet to be delivered, and during the month all outstanding accounts receivable from prior months were collected. -If Camrey's Trucks makes the appropriate adjusting entry, how much will be reported on the December 31, 2016 balance sheet as unearned revenue?

The book value of a building is equivalent to its historical cost.

Rabbit Company closes its accounts on December 31 each year. On December 31, 2016, Rabbit Company accrued interest income totaling $640 that was earned on a $40,000 investment but not yet received or recorded (the investment will pay interest of $1,100 cash on January 31, 2017). On January 31, 2017, the company received the $1,100 cash as interest on the investment. Prepare journal entries to: A. Accrue the interest earned on December 31, 2016. B. Close the Interest Income account on December 31, 2016 (the account has a year-end balance of $2,600 after adjustments). C. Record the cash receipt of interest on January 31, 2017.

Use the following information to answer questions below On April 1, 2016, SBD Corp. paid $120,000 for rent on warehouse space one year in advance. On October 1, 2016, SBD Corp. entered into a lease agreement to rent out its old warehouse space it was no longer using. This agreement calls for SBD to receive $8,000 per month from the lessee, due and payable at the end of the 4-month lease term. At December 31, 2016, none of the rental payments from the lessee had yet been received. -If SBD makes the appropriate adjusting entry, how much will be reported on the December 31, 2016 balance sheet as prepaid rent and rent receivable, respectively?

Kirsten Corporation took out a 3-year insurance policy and paid a $216,000 premium for coverage beginning on July 1, 2016. Fill the missing parts of the statements below:

Prepaid rent is an example of a contra account, and is used to record a reduction to its related account, rent expense.

Use the following information to answer questions below On the last day of December 2016, Camrey's Trucks entered into a transaction that resulted in a receipt of $216,000 cash in advance related to services that will be provided during January 2017. During December of 2016, the company also performed $128,000 of services which were neither billed nor paid. Prior to December adjustments and before these two transactions were recorded, the company's trial balance showed service revenue of $1,165,470 at December 31, 2016. There are no other prepaid services yet to be delivered, and during the month all outstanding accounts receivable from prior months were collected. -If Camrey's Trucks makes the appropriate adjusting entry, how much will be reported on the December 31, 2016 balance sheet as accounts receivable?

Use the following information to answer questions below Horton's Donuts has 12 employees who are paid $18 per hour. The company purchases its inventory, on account, daily. At December 31, 2016, each of Horton's Donuts' employees had worked 20 hours which had not been paid or recorded. Also on this date, the company had taken receipt of $74,880 of inventory from its suppliers which had not been recorded in the accounts. As of the beginning of 2016, the company had equipment totaling $1,440,000 which was depreciated at $144,000 per year. Prior to adjustments, the company's trial balance showed $205,680 in the wages expense account and $100,320 of inventory. -If Horton's Donuts makes the appropriate adjusting entry, how much will be reported on the December 31, 2016, balance sheet as accounts payable?