Exam 3: Adjusting Accounts and Preparing Financial Statements

Closing entries are normally entered in the general journal and then posted to the work sheet.

Use the following information to prepare the adjusted trial balance for Bella's Beauty Salon.Bella's Beauty Salon's unadjusted trial balance for the current year follows: BELLA'S BEAUTY SALON Trial Balance December 31 Cash \ 4,200 Prepaid insurance 1,480 Shop supplies 990 Shop equipment 3,860 Accumulated depreciation - shop equipment \ 770 Building 57,500 Accumulated depreciation - building 3,840 Land 55,000 Unearned rent 1,600 Long-term notes payable 50,000 Common stock 10,000 Retained earnings 39,860 Rent earned 2,400 Fees earned 23,400 Wages expense 3,200 Utilities expense 690 Property taxes expense 600 Interest expense 4,350 Totals \ 131.870 \ 131.870 Additional information: a.An insurance policy examination showed $1,240 of expired insurance. b.An inventory count showed $210 of unused shop supplies still available. c.Depreciation expense on shop equipment,$350. d.Depreciation expense on the building,$2,220. e.A beautician is behind on space rental payments and this $200 of accrued revenue was unrecorded at the time the trial balance was prepared.. f.$800 of the Unearned Rent account balance was earned by year-end. g.The one employee,a receptionist,works a five-day workweek at $50 per day.The employee was paid last week but has worked four days this week for which she has not been paid. h.Three months' property taxes,totaling $450,have accrued.This additional amount of property taxes expense has not been recorded. i.One month's interest on the note payable,$600,has accrued but is unrecorded.

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.

A company pays each of its two office employees each Friday at the rate of $100 per day each for a five-day week that begins on Monday.If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday,the month-end adjusting entry to record the salaries earned but unpaid is:

Presented below are the year-end balances at December 31 of Laura's Laundry Service.(All accounts have normal balances.) Accounts receivable \ 12,000 Accounts payable 25,000 Accumulated depreciation - Catering equipment 30,000 Advertising expense 4,000 Cash 42,000 Depreciation expense - Catering equipment 12,000 Insurance expense 3,000 Catering equipment 125,000 Catering servicerevenue 200,000 Notes payable 65,000 Common stock 3,000 Retained earnings 14,000 Dividends 18,000 Prepaid insurance 1,500 Salaries payable 4,000 Salary expense 97,000 Supplies 1,500 Supplies expense 9,000 Repair expense 7,000 Unearned catering servicerevenues 500 Utilities expense 9,500 a.Prepare the necessary closing entries at December 31. b.Prepare a post-closing trial balance at December 31.

On the work sheet,net income is entered in the Income Statement Credit column as well as the Balance Sheet Debit column.

The Unadjusted Trial Balance columns of a company's work sheet show the balance in the Office Supplies account as $750.The Adjustments columns show that $425 of these supplies were used during the period.The amount shown as Office Supplies in the Balance Sheet columns of the work sheet is:

A trial balance prepared after the closing entries have been journalized and posted is the:

The matching principle and the full disclosure principle are the two main accounting principles used in accrual accounting.

Based on the following information,what would be the balance in the Retained Earnings Account,assuming all accounts have a normal balance? Cash \ 6,754 Dividends \ 2,000 Accounts receivable 13,733 Consulting fees earned 13,718 Office supplies 2,625 Rent expense 3,673 Land 37,153 Salaries expense 6,642 Office equipment 14,535 Telephone expense 560 Accounts payable 6,463 Miscellaneous expense 280 Common stock 54,490 Retained earnings ?

July 31,2013,the end of the quarter is on a Wednesday.Employees get paid each Friday for the week worked.Abel Co.has five employees who earn $100 per day each.Assuming the proper adjusting journal entry was made on June 30,prepare the journal entry to record the payment of wages on August 2.

The 12-month period that ends when a company's activities are at their lowest point is called the:

What is the difference between GAAP and IFRS presentations of the current assets section on the balance sheet?

Adjusting entries result in a better matching of revenues and expenses.

A contra account is an account linked with another account; it is added to that account to show the proper net amount for that particular item.

How is the current ratio calculated? How is it used to evaluate a company?

Match the following terms with the appropriate definition:

Prepare a balance sheet from the adjusted trial balance of Hanson Storage.

Profit margin is calculated by dividing net sales by net income.

Prepare a statement of retained earnings from the adjusted trial balance of Hanson Storage.