Exam 3: Adjusting Accounts and Preparing Financial Statements

The items that follow appeared in the Income Statement columns of the work sheet prepared for Armstrong Delivery Service at current year-end.In addition,retained earnings had a credit balance of $117,000 and dividends had a debit balance of $30,000 at year-end.Prepare closing journal entries for this company. $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$$\text { Income Statement }$ . . Delivery revenue \ 98,900 Office salaries expense \ 28,100 Rent expense 14,400 Insurance expense 1,200 Office supplies expense 1,900 Depreciation expense-Office equipment Totals \ 51,600 \ 98,900 Net income Totals \ 98,900 \ 98.900

A trial balance prepared after adjustments have been recorded is called a(n):

Current liabilities include accounts receivable,unearned revenues,and salaries payable.

Show the December 31 adjusting entry to record $750 of earned but unpaid salaries of employees at the end of the current accounting period.

An unadjusted trial balance is a listing of accounts and their balances prepared before adjustments are recorded.

The cash basis of accounting is an accounting system in which revenues are reported when cash is received and expenses are reported when cash is paid.

Adjusting entries are used to record the effects of internal economic (financial)transactions and events.

Recording revenues before they are earned overstates current-period income; recording revenues in periods after they have been earned understates the recording period's income.

ABC Co.leased a portion of its store to another company for eight months beginning on October 1,2014,at a monthly rate of $800.This other company paid the entire $6,400 cash on October 1,which ABC Co.recorded as unearned revenue.The journal entry made by ABC Co.at year-end on December 31,2014,would include:

Throughout an accounting period,the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees.What is the end-of-period adjusting entry to record the portion of those fees that have been earned?

A company purchased a new truck at a cost of $42,000 on July 1,2014.The truck is estimated to have a useful life of 6 years and a salvage value of $3,000.Using the straight- line method,how much depreciation expense will be recorded for the truck for the year ended December 31,2014?

The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from)the retained earnings account is the:

Which of the following accounts would not be impacted by adjusting journal entries?

A ____________________ is useful in preparing interim statements and in showing the effects of proposed transactions.

The dividends account is normally closed by debiting it.

The current ratio:

On December 31,2012,a company forgot to record $7,000 of depreciation on office equipment.What would be the effect on the assets,net income,and equity when it comes to the 2012 financial statements?

Profit margin can also be called return on sales.

The main purpose of adjusting entries is to:

Black Company's unadjusted and adjusted trial balances on December 31 of the current year are as follows Present the four adjusting journal entries that were recorded by Black Company.