Exam 3: Adjusting Accounts for Financial Statements

In general journal form,record the December 31 adjusting entries for the following transactions and events.Assume that December 31 is the end of the annual accounting period. a.The Prepaid Insurance account shows a debit balance of $2,340,representing the cost of a three-year fire insurance policy that was purchased on October 1 of the current year. b.The Office Supplies account has a debit balance of $400; a year-end inventory count reveals $80 of supplies still on hand. c.On November 1 of the current year,Rent Earned was credited for $1,500.This amount represented the rent earned for a three-month period beginning November 1. d.Estimated depreciation on office equipment is $600. e.Accrued salaries amount to $400.

On January 1,Acme College received $1,200,000 in Unearned Tuition Revenue from its students for the spring semester,which spans four months beginning on January 2.What amount of tuition revenue should the college recognize on January 31?

A partially completed work sheet is shown below.The unadjusted trial balance columns are complete.Complete the adjustments,adjusted trial balance,income statement,and balance sheet columns.

A company records the fees for legal services paid in advance by its clients in an account called Unearned Legal Fees.If the company fails to make the end-of-period adjusting entry to record the portion of these fees that has been earned,one effect will be an:

Prior to recording adjusting entries,the Office Supplies account had a $359 debit balance.A physical count of the supplies showed $105 of unused supplies available.The required adjusting entry is:

The current ratio is computed by dividing current liabilities by current assets.

The matching principle requires that revenue not be assigned to the accounting period in which it is earned.

On April 30,2014,a three-year insurance policy was purchased for $18,000 with coverage to begin immediately.What is the amount of insurance expense that would appear on the company's income statement for the year ended December 31,2014?

Due to an oversight,a company did not make an adjusting entry for accrued and unpaid employee wages of $24,000 on December 31.This oversight would:

A company had revenue of $550,000,rent expense of $100,000,utility expense of $10,000,salary expense of $125,500,depreciation expense of $39,000,advertising expense of $40,200,dividends in the amount of $183,000,and an ending balance in retained earnings of $402,300.What is the appropriate journal entry to close income summary?

A company recorded two days of accrued salaries of $1,400 for its employees on January 31.On February 9,it paid its employees for these accrued salaries and for other salaries earned through February 9.The January 31 and February 9 journal entries are:

On October 15,a company received $15,000 cash as a down payment on a consulting contract.The amount was credited to Unearned Consulting Revenue.By October 31,10% of the services required by the contract were completed.The company will record consulting revenue of $1,500 from this contract for October.

Explain how accounting adjustments affect financial statements.

Which of the following identifies the proper order of the accounting cycle?

If a company forgot to record depreciation on office equipment at the end of an accounting period,the financial statements prepared at that time would show:

The following unadjusted and adjusted trial balances were taken from the current year's accounting system for High Point,Inc. In general journal form,present the six adjusting entries that explain the changes in the account balances from the unadjusted to the adjusted trial balance.

Use the following table to indicate the impact of the following errors made during the adjusting entry process.Use a "+" for overstatements,a "-" for understatements and a "0" for no effect.The first one is provided as an example:

Based on the adjusted trial balance,prepare a statement of retained earnings for Martin Sky Taxi Services.

A post-closing trial balance is a list of permanent accounts and their balances from the ledger after all closing entries are journalized and posted.

The company accrued interest revenue of $6,000 earned on an investment in an adjusting entry dated December 31,2014.A check for this amount was received on January 9,2015.How would the company record this transaction?