Exam 3: The Adjusting Process

Bayside Technical Services signed a contract on a six-month job for a client,starting on March 1.Bayside 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,Bayside's Accounts Receivable account had a debit balance of $6,000.After the March 31 monthly adjusting entry has been made,what will be the balance in Accounts Receivable?

The asset account,Office Supplies,had a beginning balance of $3,700.During the accounting period,office supplies were purchased,on account,for $3,500.Supplies Expense for the accounting period is $4,100.What is the ending balance of Office Supplies?

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

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

Armstrong Services has a weekly payroll of $50,000.December 31 falls on Thursday and Armstrong will pay its employees the following Monday (January 4)for the previous full week.Assume that the company has a five-day workweek and has an unadjusted balance in Salaries Expense of $845,000 at December 31.Prepare the January 4 journal entry.Reversing entries are not made.

Deborah Consultants had the following accounts and account balances after adjusting entries.Assume all accounts have normal balances.Calculate the amount of service revenue and prepare the adjusted trial balance for Deborah Consultants as of December 31,2019.

Athens Delivery Service is hired on October 31,2018 to perform services,beginning on November 1,2018.The delivery services will be performed for six months at a rate of $3,300 per month.Athens' fiscal year ends on December 31.What amount of service revenue should be recorded as an adjusting entry on December 31,2018?

Dress Designers Company has entered into a contract to design 10 new dresses for a customer.It will collect a total of $41,000 after the design services are complete.Dress Designers started design work on June 1.As of June 30,it finished 2 of the 10 designs.The company will make an adjusting entry at the end of June to accrue $10,250 of service revenue.

Aspen Event Planning Services Company 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 $2,000 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 $1,800.

The accountant of Omega Company failed to make an adjusting entry to record $6,000 of unearned service revenue that has now been earned.Assume the deferred revenue was initially recorded as a liability.Which of the following statements is TRUE?

The unadjusted trial balance of Burton Business Services at December 31,2018,and the data for the adjustments follow: Adjustment data at December 31 follows: a.Depreciation for the equipment is $4,000. b.As of December 31,2018,Burton had performed services for Wilson Company for $3,000.The invoice will be sent on January 5,2019 and payment is due on January 15,2019. c.On August 31,2018,Burton agreed to provide consulting services to Allen Company for 6 months,beginning on September 1,2018,at $1,500 per month.Allen paid $9,000 on August 31,2018.Burton treats deferred revenues initially as liabilities. Burton is preparing financial statements for the year ending December 31,2018. Requirements 1.Journalize the adjusting entries on December 31,2018. 2.Prepare the December 31,2018 adjusted trial balance.Use a proper heading.

The cash basis of accounting ignores ________.

The accountant for Barnes Auto Repair Company 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?

On September 1,Patterson Maintenance Company contracted to provide monthly maintenance services for the next five months at a rate of $2,700 per month.The client paid Patterson $13,500 on September 1.Assuming Patterson records deferred revenues using the alternative treatment,what would be the entry on September 1?

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

The accountant of Newton Legal Services failed to make an adjusting entry for supplies that had been used for the year.Assume the supplies were initially recorded as an asset.Which of the following statements is TRUE?

The accountant for Diamond Jewelry Repair Services Company forgot to make an adjusting entry for Depreciation Expense for the current year.Which of the following is an effect of this error?

The unadjusted trial balance of Albert Business Consulting at December 31,2018,and the data for the adjustments follow: Albert is preparing financial statements for the year ending December 31,2018. Adjustment data at December 31 follows: a.Albert pays its employees each Friday.December 31,2018 falls on a Monday.The employees will earn $1,250 for the five-day work week. b.On August 31,2018,Albert agreed to provide consulting services to Smith Company for 6 months,beginning on September 1,2018,at $1,500 per month.Smith paid $9,000 on August 31,2018.Albert treats deferred revenues initially as liabilities. c.Albert prepaid 6 months of business insurance on September 30,2018.The insurance begins on October 1.Albert treats deferred expenses initially as assets. d.On December 31,2018,Albert received a bill for the November and December advertising in a local newspaper,$800.This bill will be paid on its due date,which is January 10,2019. e.As of December 31,2018,Albert had performed services for Alliance Company for $5,000.The invoice will be sent on January 5,2019 and payment is due on January 15,2019.Albert received the payment on its due date. Requirement 1.Prepare the adjusting journal entries at December 31,2018. 2.Prepare the adjusted trial balance at December 31,2018.Include a proper heading.

The employees of Sinclair Services Company worked the last two weeks of December.They received their paychecks on January 2.Which of the following accounts should appear on the balance sheet as of December 31?

On June 1,Edison Company borrowed $27,000 on a one-year Note Payable with an interest rate of 10% per year.It will repay the principal and interest at the end of the one-year period.The company makes accrual adjustments at the end of each month.The company should record interest expense of $2,700 on June 30.