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

Rathbone Corp. sells major household appliance service contracts for cash. The service contracts are for a one-year, two-year, or three-year period. Cash receipts from contracts are credited to Unearned Service Revenues. This account had a balance of $ 1,100,000 at December 31, 2020, before year-end adjustment. Service contract costs are charged as incurred to the Service Contract Expense account, which had a balance of $ 325,000 at December 31, 2020. Service contracts still outstanding at December 31, 2020, expire as follows: During 2021 \ 140,000 During 2022 210,000 During 2023 99,000 What amount should be reported as Unearned Service Revenues on Rathbone's December 31, 2020, statement of financial position?

Principle Place determines that it has NOT yet recorded the 2020 accrual for interest revenue to be received in 2021. Assuming the amount to be recorded for 2020 is $ 6,000, the required adjustment at December 31, 2020, is

Ten-column work sheet The work sheet and trial balance of Santos Corporation is reproduced below. The information given below is relevant to the preparation of adjusting entries needed to both properly match revenues and expenses for the period and reflect the proper balances in the permanent and temporary accounts. Instructions As the accountant for Santos, you are to prepare adjusting entries based on the following data, entering the adjustments on the work sheet and completing the additional columns with respect to the income statement and statement of financial position. Carefully key your adjustments and label all items. (An adjusted trial balance is not required, but is included in the solution.) Round all calculations to the nearest dollar. (a) After an aging of accounts receivable, it was determined that three percent of the accounts will become uncollectible. (b) Depreciation is calculated using the straight-line method, with an eight-year life and $ 1,000 residual (salvage) value. (c) Salesmen are paid commissions of 11% of sales. Commissions on sales for the last week of December have not been paid. (d) The note was issued on October 1, 2020, with interest at 8%, due Feb. 1, 2021. (e) A physical inventory of supplies indicated $ 280 of supplies currently on hand. (f) Provisions of the company's lease contract specify rent payments must be made one month in advance, with monthly payments of $ 900/mo. This provision has been complied with as at Dec. 31, 2020.

Marvin holds 10% of the common shares of Pink Limited. For the 2020 fiscal year end, all shareholders received a cash payment to represent their share in the net income of Pink Limited. How would this cash payment be reported in the equity section of Pink Limited's financial statements?

Which of the following would NOT be a correct form for an adjusting entry?

Siamese Corp.'s account balances at December 31, 2020, included Accounts Receivable, $ 360,000 debit; Allowance for Doubtful Accounts, $ 400 debit. Sales during 2020 were $ 920,000. It is estimated that 2% of sales will be uncollectible. The required adjusting entry would include a credit to the allowance account for

Use the following information for the following questions: Orange Corp reported the following items on its calendar 2020 statement of comprehensive income: Interest revenue..................... \8 4,200 Salaries expense..................... 72,000 Insurance expense.................. 10,600 As well, their statements of financial position showed the following balances: Accrued interest receivable................ \1 0,100 \8 ,800 Accrued salaries payable................... 9,800 5,400 Prepaid insurance.............................. 1,500 1,600 -The cash paid for salaries during 2020 was

If the accountant forgets to record an adjustment for Accumulated Depreciation, Building at the end of the accounting period, this will cause

Definitions Define the following terms: 1. Event 2. Work sheet 3. Permanent accounts 4. Temporary accounts 5. Income summary 6. General ledger

On September 1, 2019, Culver Corp. issued a 9% note payable to National Bank for $ 750,000, payable in three equal annual principal payments of $ 250,000, plus interest. On this date, the bank's prime rate was 8%. The first payment for interest and principal was made on September 1, 2020. At December 31, 2020, Culver should record accrued interest payable of

An unearned revenue can best be described as an amount

The type of account and normal balance of "Accumulated Depreciation, Equipment" is

Use the following information for the following questions: Orange Corp reported the following items on its calendar 2020 statement of comprehensive income: Interest revenue..................... \8 4,200 Salaries expense..................... 72,000 Insurance expense.................. 10,600 As well, their statements of financial position showed the following balances: Accrued interest receivable................ \1 0,100 \8 ,800 Accrued salaries payable................... 9,800 5,400 Prepaid insurance.............................. 1,500 1,600 -The cash received for interest during 2020 was

Zack Jones operates a sole proprietorship, selling sporting equipment. He has recently prepared financial statements for the fiscal year end of the business. Which equity accounts would you expect to see on the balance sheet?

What account are the net revenues and expenses transferred to at the end of the accounting cycle?

A trial balance will NOT balance if

Journal entries Jonathan Green owns Gopher Greenhouses, a gardening centre (as a sole proprietorship). His first year of operations included the following selected events and transactions: January: $\quad$$\quad$ 1. He invested $ 300,000 in his business. $\quad$$\quad$ 2. He bought a greenhouse for $ 100,000 cash. May: $\quad$$\quad$ 3. He hired a greenhouse supervisor at an annual salary of $ 34,000. June: $\quad$$\quad$ 4. He ordered and paid for a shipment of flowers costing $ 80,000. $\quad$$\quad$ 5. He sold flowers for $ 40,000. Half of these sales were made on account. August: $\quad$$\quad$ 6. He received a deposit of $ 5,000 from a customer to put merchandise "on hold". $\quad$$\quad$ 7. He paid current month's salaries of $ 3,000. Instructions Prepare all required journal entries.

Grant Limited pays all salaried employees on a biweekly basis. Overtime pay, however, is paid in the next biweekly period. Grant accrues salaries expense only at its December 31 year end. Data relating to salaries earned in December 2020 are as follows: Last payroll was paid on Dec 27, 2020, for the two-week period ended Dec 27, 2020. Overtime pay earned in the two-week period ended Dec 27, 2020 was $ 7,000. Remaining work days in 2020 were December 28, 29, 30, on which days there was no overtime. The regular biweekly salaries total $ 100,000. Assuming a five-day work week, Grant should record a liability at December 31, 2020 for accrued salaries of

Mark-Wall Corp.'s trademark was licensed to Rodgers Inc. for royalties of 12% of sales of the trademarked items. Royalties are payable semi-annually on March 15 for sales in July through December of the previous year, and on September 15 for sales in January through June of the same year. Mark-Wall received the following royalties from Rodgers: During 2019 \ 5,000 \ 9,000 During 2020 8,000 6,000 Rodgers estimates that sales of the trademarked items would total $ 67,000 for July through December 2020. On their statement of comprehensive income for calendar 2020, Mark-Wall's royalty revenue should be

For adjusting entries relating to accrued revenues,