Exam 3: The Adjusting Process

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 balance sheet for December 31?

Below is the adjusted trial balance for Parsons Repair Service.Please prepare the statement of owner's equity for the year ended 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

Prepare an income statement for the year ended December 31,2012 from the adjusted trial balance below. Deavours Photography 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

Hank's Tax Planning Service has the following plant assets: Communications equipment: Cost,$4,800; useful life 8 years Furniture: Cost,$15,840; useful life 12 years Computer equipment: Cost,$10,080; useful life 4 years - Hank's monthly depreciation expense is: A) $2,560. B) $4,440. C) $210. D) $370.

The accountant for Wilson Consulting Company failed to make an adjusting entry to record $3,000 of unearned service revenue that has now been earned.Which of the following is TRUE?

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 falls on a Tuesday,and an adjustment entry is needed to accrue wage expense as of January 31.Please provide that entry.

What type of account is Accumulated depreciation and what is its normal balance? A) Revenue and debit B) Expense and debit C) Contra asset and credit D) Liability and credit

On September 1,2011,Joy Company paid $4,000 in advance for an 8-month rental space covering the period of September,2011 through April,2012.The business makes adjusting entries once a year at year-end.The adjusting entry at December 31,2011 would include a: A) debit of $4,000 to Prepaid rent expense on December 31, 2011. B) debit of $2,000 to Prepaid rent expense on December 31, 2011. C) debit of $2,000 to Rent expense on December 31, 2011. D) credit of $2,000 to Rent expense on December 31, 2011.

Which of the following is a contra account?

A business hired a repairman to overhaul their plumbing system.The repairman began working on September 15 and will finish the work on October 15.The business will pay him $4,000 when the work is 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.Please provide that adjusting entry.

Classic Artists' Services has hired a maintenance man to maintain a building they use for instruction.He will begin work on February 1 and work through till May 31.They will pay the maintenance man $2,000 at the end of May.Classic Artists' Services accrue Maintenance expense at the end of every month.What is the balance in the Accounts payable account for amounts owed to the maintenance man at the end of March?

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

The revenue principle is the basis for recording revenues―both when to record revenue and the amount of revenue to record.

On December 31,2012,the adjusting entry for depreciation was made incorrectly.The following is the entry which was made erroneously: Depreciation expense 1,500 Accumulated depreciation 1,500 The correct amount of depreciation should have been $5,100.Consider the effects of this error on the balance sheet,and identify which of the following statements is TRUE.

Duncan Services initially records prepaid expenses as expenses,and unearned revenues as revenues.Then at the end of the year,they make the necessary adjustments to accrual basis.On December 15,Duncan collected revenues of $1,000 in advance from a new client,and agreed to provide services to the client for the period of December 15 through January 15 of the following year.Please provide the adjusting entry that would be needed at year-end.

On August 1,2011,Xcel Auto Repair paid $6,000 in advance for six months' rent.Xcel makes proper adjusting entries at the end of every month.What is the balance of Prepaid rent on December 31,2011? A) $6,000 B) $1,000 C) $2,000 D) $4,000

On December 31,2012,the adjusting entry for depreciation was made incorrectly.The following entry was made erroneously: Depreciation expense 1,500 Accumulated depreciation 1,500 The correct amount of depreciation should have been $5,100.Consider the effects of this error on the income statement,and identify which of the following statements is TRUE.

Which of the following accounts does cash-basis accounting ignore?

What is the effect of the adjusting entry for Depreciation expense?

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 expense of $500.