Exam 3: The Adjusting Process

Magnolia Tree Service has a weekly payroll of $50,000.December 31,2016 falls on Thursday and Magnolia will pay its employees the following Monday (January 4,2017)for the previous full week.Assume that Magnolia has a five-day workweek and has an unadjusted balance in Salaries Expense of $845,000.Prepare the December 31,2016 adjusting entry.

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

Kostner Financial Services performed accounting services for a client in December.A bill was mailed to the client on December 30.The company received the client's check by mail on January 5.Which of the following accounts should appear on the income statement for the year ended December 31 as related to the services performed?

The partial worksheet of Ruth Furniture is as follows: Accumulated Calculate and enter the amounts for the Adjusted Trial Balance columns.

Classic Artists' Services signed a contract with a maintenance service company to maintain a building that Classic will use for office purposes.The contract states that the work will begin work on February 1 and end on May 31.Classic Artists' will pay the maintenance service company $16,000 at the end of May.It accrues Maintenance Expense at the end of every month.What is the balance in the Accounts Payable account for amounts owed to the maintenance service company at the end of March?

Russin Tax Planning Service bought computer equipment for $24,000 on January 1,2016.It has an estimated useful life of four years and zero residual value.Russin uses the straight-line method to calculate depreciation and records depreciation expense in the books at the end of every month.Calculate the amount of Depreciation Expense for the period,January 1,2016 through September 30,2016,for this equipment.(Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar. )

Accrued revenue represents the receipt of cash before the revenue has been earned.

Williams Enterprises prepaid six months of office rent totaling $9,000 on October 1,2017.Assuming Williams records deferred expenses using the alternative treatment,what would be the entry on October 1,2017?

The accountant of Omega Consulting failed to make an adjusting entry to record $6,000 for unearned service revenues that were earned before the end of the fiscal year.Assume the company initially recorded a liability.Which of the following statements is true?

Unearned Revenue is classified as a(n)________ account.

In the case of deferred revenue,the adjusting entry at the end of the period includes a credit to Service Revenue.Assume the deferred revenue is initially recorded as a liability.

The Accumulated Depreciation account is ________.

If a company fails to make an adjusting entry for accrued revenues,the net income will be overstated.

Harvard Financial Services purchased computers that are to be used in its consultancy services.Based on the matching principle,what account,other than Computers,should appear on the balance sheet as of December 31,2016?

The accounting period used for the annual financial statements is called the fiscal year.

At Sea,a cruise industry magazine,collected $480,000 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 basis of accounting.Provide the adjusting entry needed on June 30.(Ignore explanation. )Assume the magazine initially records a liability for the subscription revenue.

The following extract was taken from the worksheet of Kelly Bakers for the year 2016. For the above information,determine the amount of Depreciation Expense for the equipment used in the business.

An adjusting entry that debits Accounts Receivable is an example of a(n)________.

The accountant of Barnes Architectural Services failed to make an adjusting entry to record $7,000 of depreciation expense.Which of the following statements is true?

In the case of deferred revenue,the adjusting entry at the end of the period includes a debit to Service Revenue.Assume the deferred revenue is initially recorded as a liability.