Exam 3: The Adjusting Process

A worksheet is an external document that forms a part of the financial statements.

Accumulated Depreciation is a(n)________ account and carries a ________ normal balance.

Which of the following is a contra account?

The accountant of Skyscrapers Architectural Services failed to make an adjusting entry to record $7,000 of depreciation expense.Which of the following statements is true?

An adjusting entry that debits Accounts Receivable is an example of a(n)________.

Laramie Inc.signed a contract with a service provider for security services at a rate of $250 per month for the period of January through June.Laramie Inc.will pay the service provider the entire amount at the end of June.The company makes adjusting entries each month.During the month of June,it should record total security expense of $500.

The following extract was taken from the worksheet of Kelly Bakers for the year 2014. For the above information,determine the amount of Depreciation Expense for the equipment used in the business.

The following extract was taken from the worksheet of Dutch Inc.for the year 2014. From the above information,determine the amount of the Rent Expense adjustment.

A business purchased equipment for $150,000 on January 1,2015.The equipment will be depreciated over five years of its useful life using the straight-line depreciation method.The business records depreciation once a year on December 31.Which of the following is the adjusting entry required to record depreciation on equipment for the year 2015? (Assume the salvage value of the acquired equipment to be zero.)

A business hired a repairman to overhaul its plumbing system.The repairman began work on September 15 and completed it on October 15.The business agreed to pay him $4,000 when the work was completed.As of September 30,the work was 50% complete and the business made an adjusting entry to accrue repair expense as of the end of September.On October 15,the work was completed and the repairman was paid in full.Provide the journal entry for the cash payment on October 15.(Ignore explanation)

Recipes.Inc.purchased $2,000 of supplies on account.Under the accrual basis of accounting,no entry is made until the amount is paid.

On March 1,2014,Nortons Inc.paid $60,000 for office rent covering the three-month period ending May 31,2014.Journalize the adjusting entry on March 31 by using the alternative treatment of prepaid expenses.

Luminous Electrical Inc.performed services costing $8,000 on January 24 and invoiced the customer.Luminous received the $8,000 on January 31.Provide the journal entry on January 31 when the cash was received.(Ignore explanation.)

The following information is available for Able Inc.Office Supplies account. From the above information,calculate the amount of office supplies purchased.

Which of the following assumes that financial statements of a business can be prepared for specific periods?

The worksheet is NOT a journal,a ledger,or a financial statement.

A depreciable asset's cost minus accumulated depreciation is called ________.

Healthy Living,a diet magazine,collected $500,000 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.Provide the journal entry for collection of cash in May.(Ignore explanation). Assume the magazine initially records a liability for the subscription revenue.

A business hired a repairman to overhaul its plumbing system.The repairman began work on September 15 and intends to complete it on October 15.The business will pay him $4,000 when the work is completed.As of September 30,the work was 50% complete.Provide the adjusting entry to accrue repair expense by the end of September.(Ignore explanation)

On July 1,Alpha Inc.prepaid rent for a small equipment storage area.They paid $20,000 to rent the area for the period of July 1 through the end of the year.Provide the journal entry needed on July 1 when the payment is made.(Ignore explanation)Assume the prepaid expense is initially recorded as an asset.