Exam 3: The Adjusting Process

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

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 31 when the cash was received?

Under cash-basis accounting,revenue is recorded when it is earned,regardless of when cash is received.

Unearned revenue would be classified as a(n)________ account.

A company received $5,000 for 100 one-year subscriptions on July 1.The journal entry to record this cash receipt would include a: A) debit to Unearned revenue. B) debit to Prepaid expenses. C) credit to Unearned revenue. D) credit to Cash.

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

An example of an interim accounting period is one year.

Below is the adjusted trial balance for Parsons Repair Service.Please prepare the income statement for the year ended December 31,2012. Parsons Repair Service Adjusted Trial Balance December 31,2012 Accounts Debit Credit Cash \ 1,600 Accounts receivable 2,400 Prepaid rent 800 Supplies 200 Building 14,000 Accumulated depreciation \ 2,000 Accounts payable 4,200 Salary payable 1,000 Unearned revenue 800 D. Parsons, capital 6,000 D. Parsons, drawing 1,000 Service revenue 50,000 Salary expense 21,000 Rent expense 14,000 Depreciation expense 8,500 Supplies expense 500 Total \ 64,000 \ 64,000

In the case of a prepaid expense,the adjusting entry required at the end of a period consists of a credit to Prepaid expense.

The Accumulated depreciation account is:

A business acquires equipment for $140,000 on January 1,2011.The equipment depreciation will be $20,000 each year for the seven years of the asset's expected life.The business records depreciation once a year on December 31.Which of the following is the adjusting entry required on December 31,2011? A) A debit $140,000 to Equipment and a credit $140,000 to Cash. B) A debit $140,000 to Depreciation expense and a credit $140,000 to Accumulated depreciation. C) A debit $20,000 to Depreciation expense and a credit $20,000 to Accumulated depreciation. D) A debit $20,000 to Depreciation expense and a credit $20,000 to Equipment.

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

Prepare a statement of owner's equity for the year ended December 31,2012 from the adjusted trial balance below. Deavours Photography Company Adjusted Trial Balance December 31,2012 Accounts Debit Credit Cash \ 2,000 Prepaid insurance 2,000 Office supplies 600 Office equipment 16,000 Accumulated depreciation \ 3,000 Accounts payable 5,000 Salaries payable 900 Unearned servicerevenue 2,500 C. Devours, capital 7,450 C. Devours, drawing 5,600 Service revenue 15,350 Salaries expense 4,600 Depreciation expense 1,000 Supplies expense 400 Insurance expense 2,000 Totals \ 34,200 \ 34,200

The adjusting entry to record Depreciation expense accomplishes which of the following? A) Records an expense B) Updates a contra asset C) Updates a liability D) Both A and B

Which of the following is NOT considered an interim accounting period?

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. -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?

How do the adjusting entries differ from other journal entries?

Double-A Public Relations Firm got a new client on September 1.Double-A agreed to 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 on September 1.On September 30,Double-A needs to make an adjusting entry.Please provide that adjusting entry.

The owner of Recipes.org purchases $2,000 of supplies on account.Under the accrual basis of accounting,no entry is made until the $2,000 is paid.

On July 1,Alpha Company prepaid rent for a small equipment storage area in the amount of $12,000 for the period of July 1 through the end of the year.At the end of July,an adjustment entry is needed.Please provide that adjustment entry.