Exam 3: The Adjusting Process

Ursula Tax Planning Service has the following plant assets: Communications equipment: Cost,$7,120 with useful life of eight years; Furniture: Cost,$22,800 with useful life of 12 years; and Computer: Cost,$12,000 with useful life of four years.(Assume residual value of all the assets is zero. )Ursula's monthly depreciation expense calculated using the straight-line method is ________.(Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar. )

Salaries are $6,500 per week for five working days and are paid weekly at the end of the day Fridays.The end of the month falls on a Thursday.The accountant for Dayton,Inc.made the appropriate accrual adjustment and posted it to the ledger.The balance of Salaries Payable,as shown on the adjusted trial balance,will be a ________.(Assume that there was no beginning balance in the Salaries Payable account. )

Which of the following entries would be made because of the matching principle?

If a company fails to make an adjusting entry for deferred expense,the assets will be overstated.Assume the deferred expense is initially recorded as an asset.

The cash basis of accounting ignores ________.

Techno Technical Services is working on a six-month job for a client,starting on February 1.It will collect $24,000 from its customer when the job is finished but the revenue is earned evenly over the six months.On March 31,before adjusting entries are made,Techno's Accounts Receivable account had a debit balance of $3,000.After the March 31 monthly adjusting entry has been made,what will be the balance in Accounts Receivable?

The employees of Leicester Services,Inc.worked the last two weeks of December,2016.They received their paychecks on January 2,2017.Which of the following accounts should appear on the income statement for the year ended December 31,2016?

Contra asset accounts,such as Accumulated Depreciation,always have normal debit balances.

If an adjusting entry includes a debit to Rent Expense,it indicates that the payment of rent had been previously recorded as a(n)________.

On January 1,Ogden,Inc.had $1,500 of supplies on hand.During January,Ogden purchased $5,500 worth of new supplies.At the end of the month,a count revealed $700 worth of supplies remaining on the shelves.The adjusting entry needed will include a debit to Supplies Expense of $6,300.The supplies were initially recorded as an asset.

In the case of a deferred expense,the adjusting entry required at the end of a period will consist of a debit to the Prepaid Expense account.Assume the deferred expense was initially recorded as an asset.

The worksheet is a useful step in preparing adjusting entries and the unadjusted trial balance.

The accountant for Jones Auto Repair,Inc.failed to make an adjusting entry to record $5,000 of unpaid salaries for the last two weeks of the year.Which of the following is an effect of this omission?

A contra account's normal balance (debit or credit)is the opposite of the normal balance of the related account.

Sierra Event Planning Services,Inc.records deferred expenses and deferred revenues using alternative treatments.It makes adjusting entries as needed to bring its books to the full accrual basis once a year at the end of the year.On December 15,it collected $1,000 from a customer in advance for a series of events that will start late December and end in March.At the end of the year,it had performed approximately 10% of the services for its customer.The adjusting entry on December 31 will include a debit to Service Revenue for $900.

When does a company account for revenue if it uses cash basis accounting?

During December 2016,Carroll Service Company performed $1,500 of services,but as of December 31,2016,Carroll has not yet billed the clients.If Carroll fails to make an adjusting entry on December 31,2016,indicate the effect on assets,liabilities,equity,and net income. Understated, Overstated, No Effect Assets Liabilities Equity Net Income

The advance cash payments of future expenses are called ________.

The sum of all the depreciation expenses recorded to date for a depreciable asset is called residual value.

If a company is using accrual basis accounting,when should it record revenue?