Exam 13: Accounting Information Systems and Adjusting Entries: A Comprehensive Guide

On May 15, 2020, Bagle Corp. purchased 1,000 common shares of Holter Inc. for $ 24,000, as a Fair Value through Other Comprehensive Income (FV-OCI) equity investment. At December 31, 2020, the fair value of these shares was $ 26,550. The required adjusting entry to reflect this fact is

Which of the following is NOT an account appearing in the equity section of a corporation's statement of financial position?

Which of the following statements about the trial balance is correct?

Amazing Company acquires a trade name from Fantastic Ltd. Amazing estimates it will receive $ 7,200 per year from the name over the next 9 years. Using a discount rate of 4%, what is the value in use to Amazing of this trade name?

On September 1, 2020, Rudolph Corporation received $ 54,000 cash from a tenant for one year's rent in advance, and recorded the transaction with a credit to Rent Revenue. The December 31, 2020, required adjusting entry in connection with this would be

Adjusting and closing entries 1. Using the adjusted trial balance of Charles Corporation from Pr. 3-99, journalize the adjustments that were made. 2. Using the adjusted trial balance of Charles Corporation from Pr. 3-99, journalize the closing entries that are required.

The account credited for a receipt of cash on account is

Calculation of expense The records for Jay Inc. showed the following for 2020: Accrued expenses............................... \2 ,000 \3 ,600 Prepaid expenses................................... 900 800 Cash paid during the year for expenses...... \5 5,000 Instructions Calculate the total amount of expenses that should be reported on the 2020 statement of comprehensive income.

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

On September 1, 2020, Regal Corp. made the annual lease payment of $ 24,000 for its fleet of delivery trucks. The payment covered the period September 1, 2020 to August 31, 2021. Assuming the entire amount had originally been debited to Lease Expense, the required adjustment at December 31, 2020 is

Adjusting entries The information shown below relates to Flower Corporation. At December 31, 2020, Flower's general ledger shows the following balances: Prepaid lease ............................ Debit Prepaid insurance ...................... Debit Unearmed revenue ..\ldots\ldots\ldots\ldots\ldots\ldots.\ldots\ldots Credit In addition, the following information is available: 1. The entire amount shown as prepaid lease has expired. 2. One-third of the amount shown as prepaid insurance has expired. 3. Half of the amount shown as unearned revenue has now been earned. Instructions Prepare all adjusting entries that are required at December 31, 2020.

Definitions Provide clear, concise answers for the following: 1. What is the accrual basis of accounting? 2. What is an accrued expense? 3. What is accrued revenue? 4. What is a prepaid expense? 5. What is unearned revenue? *6. State the rule that indicates which adjusting entries for prepaid and unearned items should be reversed.

If the inventory account at the end of the year is understated, the effect will be to

Which of the following statements is INCORRECT regarding fair value adjustments for investments?

Closing entries Below is a selection of account balances for Howard Ltd. at December 31, 2020: Sales \8 56,000 Sales returns 40,000 Cost of goods sold. 456,000 Advertising expense 38,000 Salaries expense 113,000 Depreciation expense 31,000 Insurance expense 9,000 Administrative expense 10,000 All accounts have their normal balances. Instructions Prepare all necessary closing entries at December 31, 2020.

On May 15, 2020, Croissant Corp. purchased 1,000 common shares of Holter Inc. for $ 24,000, as a Fair Value through Net Income (FV-NI) equity investment. At December 31, 2020, the fair value of these shares was $ 23,100. The required adjusting entry to reflect this fact is

On October 31, 2020, Kiwi Inc. lent $ 63,000 to Plum Inc. in return for a three-month, 4% interest-bearing note. What adjusting entry should Kiwi Inc. make on December 31, 2020, in connection with this note?

A trial balance

The salary expense on the 2020 statement of comprehensive income was

Adjusting entries Data relating to the balances of various accounts affected by adjusting or closing entries appear below. (The entries, which caused the changes in the balances, are not given.) You are asked to supply the missing journal entries, which would logically account for the changes in the account balances. 1. Interest receivable at January 1, 2020, was $ 2,000. During 2020, cash received from debtors for interest on outstanding notes receivable was $ 4,700. The 2020 statement of comprehensive income showed Interest Revenue of $ 4,900. You are to prepare the missing adjusting entry that must have been made, assuming reversing entries are not made. 2. Unearned rent at January 1, 2020 was $ 5,300, and at December 31, 2020 was $ 6,000. The records indicate cash receipts from rental sources during 2020 were $ 45,000, all of which were credited to the Unearned Rent Account. You are to prepare the missing adjusting entry. 3. Accumulated Depreciation-Equipment at January 1, 2020, was $ 120,000, and at December 31, 2020, was $ 150,000. During 2020, one piece of equipment was sold. The equipment had an original cost of $ 10,000 and was three-quarters depreciated when sold. You are to prepare the missing adjusting entry. 4. Allowance for doubtful accounts on January 1, 2020, was $ 50,000. The balance in the allowance account on December 31, 2020, after making the annual adjusting entry, was $ 65,000. During 2020 bad debts of $ 30,000 were written off. You are to provide the missing adjusting entry. 5. Prepaid rent at January 1, 2020, was $ 24,000. During 2020 rent payments of $ 160,000 were made and debited to Rent Expense. The 2020 statement of comprehensive income shows Rent Expense of $ 180,000. You are to prepare the missing adjusting entry that must have been made, assuming reversing entries are not made. 6. Retained earnings at January 1, 2020, was $ 150,000 and at December 31, 2020, it was $ 210,000. During 2020, cash dividends of $ 50,000 were paid, which were correctly debited to Retained Earnings. You are to prepare the missing closing entry to close the Income Summary account.