Exam 3: The Adjusting Process

On December 31,2016,interest of $1,500 has accrued on a bank note.This interest payment is due on January 20,2017.If no adjusting entry is made on December 31,2016,indicate the effect on assets,liabilities,equity,and net income.

On December 31,2016,$2,500 of salaries have been earned but not yet paid to employees.If the business failed to make an adjusting entry on December 31,2016,indicate the effect on assets,liabilities,equity,and net income.

Prepaid Rent is an expense account that appears on the income statement.

Salaries are $4,500 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 Company 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. )

Unearned Revenue is a(n)________ account and carries a normal ________ balance.

An adjusting entry that credits Salaries Payable is an example of a(n)________.

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

Explore,a travel 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.

Healthy Living,a diet magazine,collected $240,000 in subscription revenue on May 31.Each subscriber will receive an issue of the magazine in each of the next 12 months,beginning with the June issue.The company uses the accrual method of accounting.What is the amount of Subscription Revenue that has been earned by the end of December? (Round any intermediate calculations to two decimal places,and your final answer to the nearest whole number. )

Jupiter Company signed a one-year $47,000 note payable at 8% interest on May 1,2016.If Jupiter Company only adjusts its accounts once a year at year-end,how much interest expense was accrued on December 31,2016? (Round any intermediate calculations to two decimal places,and your final answer to the nearest whole number. )

Allen Company is hired on December 15,2016 to perform services,beginning on December 16,2016.Under this agreement,Allen will earn $3,700 monthly and receive payment on January 15,2017.What amount of service revenue should be recorded for the year ending December 31,2016?

For accounting purposes,depreciation refers to the ________.

At the time the transaction occurred,which of the following would result in an increase in net income under the accrual basis of accounting,but would not result in an increase in net income under cash basis accounting?

A business hired a repair service to overhaul its plumbing system.The repair service began work on September 15 and completed it on October 15.The business agreed to pay the service $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 repair service was paid in full.Provide the journal entry for the cash payment on October 15.(Ignore explanation. )

List and briefly discuss three accounting concepts and principles that apply to accrual basis accounting.

The cash basis of accounting ignores ________.

On September 1,2016,Joy Company paid $6,000 in advance for an eight-month rental space covering the period of September,2016 through April 2017.The deferred expense was initially recorded as an asset.Joy Company makes adjusting entries once a year at year-end.The adjusting entry on December 31,2016 would include a ________.

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

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

Downs Tax Planning Service bought communications equipment for $9,600 on January 1,2017.It has an estimated useful life of five years and zero residual value.Downs uses the straight-line method to calculate depreciation and records depreciation expense in the books at the end of every month.As of June 30,2017,the balance in the Accumulated Depreciation account for this equipment is ________.