Exam 5: Adjusting Entries and the Work Sheet

Match the terms with the definitions. -The third pair of amount columns on the work sheet.Used to prove the equality of the debits and credits in the general ledger accounts after making all end-of-period adjustments.

An account used with a related account to bring about a decrease in the net amount of the two account balances is called a(n)

If the debits in the Income Statement columns of the work sheet total $50,000 and the credits total $60,000 before net income or net loss has been determined,the business has a net income of $10,000.

Match the terms with the definitions. -A form used to pull together all of the information needed to enter adjusting entries and prepare the financial statements.

If the book value of an asset is $12,500 and the accumulated depreciation is $3,500,the original cost of the asset is

The balance sheet reports

Match the terms with the definitions. -An account with a credit balance that is deducted from the related asset account on the balance sheet.

When an account balance is not affected by an adjusting entry,the amount shown in the Trial Balance columns is extended directly to the Adjusted Trial Balance columns.

Journalize the necessary year-end adjusting entries based on the following account balances before adjustments. Trial Balance (partial) December 31, 20-- Cash 12,340 Supplies 2,100 Prepaid Insurance 1,800 Equipment 34,000 Accumulated Depreciation-Equipment 8,000 Accounts Payable 6,430 Wages Expense 17,333 Insur ance Expense 3,333 a. The inventory of supplies on hand at December 31,20--,was $230. b. The 4-month insurance premium of $1,800 was purchased on December 1,20--. c. The $34,000 of equipment was purchased on January 1,two years ago.It has a salvage value of $2,000.Straight-line depreciation was used to compute depreciation at the end of last year. d. Wages accrued at December 31,20--,were $3,700.

A contra-asset appears on the income statement.

The depreciation system used by many businesses for tax purposes is the

Under the cash basis of accounting,a certain expense may be incurred in one period but not entered until the following period.

If a business records revenue when it is received and records the purchase of a building as an asset and makes adjustments to allocate the cost of the building over many accounting periods,the business accounting system is a(n)

When assets are recorded at original value,they are recorded under the

The historical cost principle allows for assets to be recorded at actual cost.

Recording adjustments on the work sheet has no effect on the ledger accounts.

To record the purchase of assets on account under the modified cash basis of accounting method,

The adjusting entry for the depreciation of office equipment for the period includes

The trial balance and information for year-end adjustments for Vilardi Company are as follows: Vilardi Company Trial Balance December 31, 20-- Cash 15,700 Accounts Receivable 9,400 Supplies 6,000 Prepaid Insurance 1,500 Equipment 50,000 Accumulated Depreciation-Equipment 10,000 Accounts Payable 5,400 Wages Payable Vilardi, Capital 29,460 Vilardi, Drawing 1,500 Service Fees 63,000 Wages Expense 15,100 Rent Expense 7,800 Supplies Expense Utilities Expense 860 Insurance Expense Depreciation Expense-Equipment 107,860 107,860 a. Supplies on hand at year-end amounted to $420. b. The equipment costing $50,000 has an expected life of five years and no salvage value.Vilardi uses straight-line depreciation. c. A premium of $1,500 for a one-year insurance policy was paid on November 1. d. Wages earned by employees but not paid by year-end amounted to $900. Prepare the necessary year-end adjustments on a 10-column work sheet (identify each adjustment by letter),and complete the work sheet.

The trial balance and information for year-end adjustments for Litton Company are as follows: Litton Company Trial Balance December 31, 20-- Cash 19,780 Accounts Receivable 5,500 Supplies 1,500 Prepaid Insurance 2,400 Equipment 30,200 Accumulated Depreciation-Equipment 5,000 Accounts Payable 5,520 Wages Payable Litton, Capital 44,000 Litton, Drawing 4,000 Service Fees 20,000 Wages Expense 10,000 Rent Expense 900 Supplies Expense Utilities Expense 240 Insurance Expense Depreciation Expense-Equipment 74,520 74,520 a. Ending inventory of supplies is $800 at December 31,20--. b. Unexpired insurance as of year-end is $600. c. Depreciation of equipment is $5,000. d. Wages earned but not paid as of year-end are $1,700. Prepare the necessary year-end adjustments on a 10-column work sheet (identify each adjustment by letter),and complete the work sheet.