Exam 2: A Review of the Accounting Cycle

Bannister Inc.'s fiscal year ended on November 30,2013.The accounts had not been adjusted for the fiscal year ending November 30,2013.The balance in the prepaid insurance account as of November 30,2013,was $35,200 (before adjustment at Nov.30,2013)and consisted of the following policies: The adjusting entry required on November 30,2013,would be

The Supplies on Hand account balance at the beginning of the period was $6,600.Supplies totaling $12,825 were purchased during the period and debited to Supplies on Hand.A physical count shows $3,825 of Supplies on Hand at the end of the period.The proper journal entry at the end of the period

The following summary balance sheet account categories of Sun Company increased during 2013 by the amounts shown: The only change to retained earnings during 2013 was for $26,000 of dividends.What was Sun Company's net income for 2011?

An accrued expense can be described as an amount

The records of Majestic Co.showed the following account balances on December 31,2013: Assuming that the inventory balance at January 1,2013,is $152,000,prepare the entry to adjust the inventory accounts.

Chips-n-Bits Company sells service contracts for personal computers.The service contracts are for a one-year,two-year,or three-year period.All sales are for cash and all receipts are credited to Unearned Service Contract Revenues.This account had a balance of $144,000 at December 31,2012,before year-end adjustment.Service contract costs are charged as incurred to the Service Contract Expense account,which had a balance of $36,000 at December 31,2012.Service contracts still outstanding at December 31,2012,expire as follows: What amount should be reported as unearned service contract revenues in Chips-n-Bits December 31,2012,balance sheet?

Arid Company paid $1,704 on June 1,2013,for a two-year insurance policy and recorded the entire amount as Insurance Expense.The December 31,2013,adjusting entry is

The records of McGarrett Corp.show the following information: (a)Purchased Machine B used in the factory for $450,000 on July 1,2010.Machine B has an estimated useful life of 12 years and a residual value of $30,000.McGarrett uses straight-line depreciation. (b)Sales for 2013 amounted to $4,000,000,including $600,000 of sales on credit.Bad debt losses are estimated based on actual experience to be .25% of credit sales. (c)The dollar value of office supplies inventory at the beginning of 2013 equaled $600.During 2013,office supplies costing $8,800 were purchased.This amount was debited to office supplies expense.The dollar value of the ending inventory was determined to be $400.The January 1 balance of $600 still appears as the balance in the office supplies inventory account. (d)On July 1,2013,the company paid a three-year insurance premium in the amount of $2,160.This amount was debited to insurance expense. (e)On October 1,2013,the company paid rent on some leased office space.The payment of $7,200 cash was for the following six months.The $7,200 payment was debited to rent expense Prepare journal entries to adjust the books of McGarrett Corp.at December 31,2013.

Richards Company,a calendar-year company,sells magazine subscriptions to subscribers.The magazine is published semiannually and is shipped to subscribers on April 15 and October 15.Only one-year subscriptions for two issues are accepted.Subscriptions received after the March 31 and September 30 cutoff dates are held for the following publication.Cash is received evenly during the year and is credited to deferred subscription revenue.During 2013,$3,600,000 of cash was received from customers.The beginning balance for 2013 of the deferred subscription revenue account was $750,000.What is Richards' December 31,2013,deferred subscription revenue balance?

A bond issued June 1,2013,by a calendar-year company pays interest on April 1 and October 1.A bond is a financial security issued by a corporation in return for cash borrowed from investors.Bonds typically pay interest twice per year.The investor makes the investment on the date the bond is issued.Interest expense for 2013 is recognized on these bonds by the issuer for a period of

Carlton Company sold equipment for $3,700 that originally cost $22,000.The balance of the Accumulated Depreciation account related to this equipment was $19,000.The entry to record the disposal of this equipment would include a

Which of the following would typically be considered a source document?

Beginning and ending Accounts Receivable balances were $28,000 and $24,000,respectively.If collections from clients during the period were $80,000,then total services rendered on account were apparently

An adjusting entry will not take the format of which one of the following entries?

Moon Company purchased equipment on November 1,2013,by giving its supplier a 12-month,9 percent note with a face value of $48,000.The December 31,2013,adjusting entry is

For a given year,beginning and ending total liabilities were $18,000 and $20,400,respectively.At year-end,owners' equity was $40,200 and total assets were $4,000 larger than at the beginning of the year.If new capital stock issued exceeded dividends by $4,800,net income (loss)for the year was apparently

Which of the following regarding accrual versus cash-basis accounting is true?

Thompson Company sublet a portion of its office space for ten years at an annual rental of $36,000,beginning on May 1.The tenant is required to pay one year's rent in advance,which Thompson recorded as a credit to Rental Income.Thompson reports on a calendar-year basis.The adjustment on December 31 of the first year should be

Under the cash basis of accounting,

Which of the following criteria must be met before an event should be recorded for accounting purposes?