Exam 3: The Adjusting Process

Hank's Tax Planning Service started business in January,2012.He rented an office for $900 a month starting January 1.He prepaid the rentals through June 30.He makes accrual adjustments monthly.As of April 30,Hank's ledger shows a balance in Prepaid Rent of how much? A) $1,800 B) $900 C) $2,700 D) $5,400

Lucent Electrical Repair performs services costing $3,000 on January 12 and invoices the customer.Lucent receives the $3,000 on January 31. -What entry is made on January 12 when services were rendered?

If a company is using the accrual method of accounting,when is revenue recorded?

In the case of Unearned revenue,the adjusting entry at the end of the period includes a debit to Service revenue.

Robert Rogers,CPA performed accounting services for a client in December.A bill was mailed to the client on December 30.Roberts received a check in the mail on January 5.The revenue principle would require that which of the following accounts appear on the income statement for the year ended December 31?

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 March 1,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?

On January 1,2012,Lexmark Company's Accounts receivable account had a debit balance of $10,000.During January,2012,the company billed customers for services in the amount of $300,000.Also during January,the company collected $240,000 from its customers on account.What was the balance in the Accounts receivable account at the end of January?

The accountant for Duman Legal Services failed to make an adjusting entry for supplies that had been used for the year.Which of the following is TRUE?

The matching principle means which of the following?

Generally accepted accounting principles require the use of accrual accounting.

Century Security Services had a new customer come in to their office and request their services for a two-month period.Century will collect a total of $10,000 from the customer at the end of the two-month period.Century began providing services on June 1.On June 30,Century needs to make an adjusting entry to accrue service revenue.Please provide that adjusting entry.

Chelsea Services Company pays its staff their wages every Friday.The staff works a five-day work week and the payroll amounts to $25,000 per week.The last day of January fell on a Tuesday,and an adjustment entry was made on that date to accrue wage expense.On Friday,February 3,Chelsea Company pays out $25,000 in wages as usual.Please provide the entry needed at the time the wages are paid.

On December 31,2011,the balance in Pinnacle Exploration Company's Unearned revenue account is credit of $4,200.In January,2012,the company received an advance payment of $12,000 from a new customer for services to be performed.By January 31,adjustments had been made to recognize $8,500 of the revenue which had been earned during January.What would be the balance in Unearned revenue on January 31,2012? A) $16,200 credit B) $8,500 debit C) $3,500 credit D) $7,700 credit

Blum Services has the following unadjusted balances at year-end. Cash \ 12,900 Prepaid insurance 2,000 Office supplies 1,300 Office equipment 10,500 Accumulated depreciation-office equipment 3,500 Accounts payable 2,900 Salaries payable -0- Unearned service revenue 4,500 A.L.Blum, capital 11,750 A.L.Blum, drawing 5,600 Service revenue 13,350 Salary expense 3,700 Depreciation expense -0- Supplies expense -0- Insurance expense -0- The following information is available to use in making adjusting entries. a.Office supplies on hand at year-end: $250 b.Prepaid insurance expired during the year: $325 c.Unearned revenue remaining at year-end: $2,500 d.Depreciation expense for the year: $1,800 e.Accrued salaries at year-end: $900 Using the work sheet below,prepare the trial balance,the adjustments and the adjusted trial balance for Blum Services.

What type of account is Prepaid rent and what is its normal balance? A) Expense and debit B) Liability and credit C) Revenue and credit D) Asset and debit

A business hired a repairman to overhaul their plumbing system.The repairman began working on September 15 and finished the work on October 15.The business agreed to pay him $4,000 when the work was completed.As of September 30,the work was 50% complete,and the business made an adjusting entry to accrue repair expense as of the end of September.On October 15,the job was done and the business paid the repairman in full.Please provide the journal entry for the cash payment on October 15.

All of a company's accounts and their balances appear on the:

Double-A Public Relations Firm got a new client on September 1.Double-A will provide services to the new client at a rate of $250 per month for a three-month period beginning September 1.Double-A required the client to pay for the entire period in advance.Please show the journal entry for the cash collected by Double-A on September 1.

In the case of Unearned revenue,the cash is received first,and the revenue is earned later.

Which of the following situations would result in an increase in income under the accrual method of accounting,but would NOT result in an increase in income under the cash-basis method of accounting?