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?

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.

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

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?

Unearned revenue is revenue that:

Robert Rogers, CPA owns a computer used for the company's business. The matching principle would require that which of the following accounts appear on the income statement for the year ended December 31?

Hank's Tax Planning Service bought computer equipment for $19,200 on January 1, 2012. It has an estimated useful life of 4 years. Hank records depreciation monthly. As of September 30, 2012, Hank has recorded total depreciation expense for this equipment of:

Hank's Tax Planning Service bought communications equipment for $7,200 on January 1, 2012. It has an estimated useful life of 5 years. Hank records depreciation monthly. As of June 30, 2012, Hank's balance sheet will show book value for this equipment of:

Prepare a balance sheet from the adjusted trial balance below.

On December 31, 2012, the adjusting entry for depreciation was made incorrectly. The following entry was made erroneously: 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.

A business pays its insurance premium of $2,400 on November 1 of each year. On January 1 of the new year (after December 31 adjustments), the Prepaid insurance account has a debit balance of:

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

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

The accountant for Hobson Electrical Repair Company failed to make an adjusting entry to record $5,000 of unpaid salaries for the last two weeks of the year. Which of the following is TRUE?

Which of the following entries would be made as the result of the revenue principle?

An adjusting entry that debits Accounts receivable is an example of a(n):

Argyle Designs has a contract to design 20 new dresses for a customer, and will collect a total of $40,000 when the design services are complete. They start on June 1. As of June 30, Argyle has finished 4 of the 20 designs. They will make an adjusting entry at the end of June to accrue $10,000 of service revenue.

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 entry is recorded when the cash is collected in May?

If an adjusting entry includes a debit to Rent expense, that would indicate that the payment of rent had been previously recorded as a(n)________ entry.

Entries that record revenues earned before the cash is collected are: