Exam 3: The Adjusting Process

The accountant for Eagle Financial Services Company failed to make an adjusting entry to record $3,000 of telephone expenses for the last two months of the year.Which of the following statements is TRUE?

An adjusted trial balance does not list the revenues and expenses of a business.

Murphy Company prepaid $8,400 on October 1,2018 for a one-year insurance premium.Coverage begins October 1.On January 1,2019 (after December 31 adjustments),the Prepaid Insurance account will have a debit balance of ________.(Round any intermediate calculations to two decimal places,and your final answer to the nearest whole number. )

Modern Artists' Services signed a contract with a maintenance service company to maintain a building that Modern Artists' will use as an office.The contract states that the work will begin on February 1 and end on May 31.Modern Artists' will pay the maintenance service company $8,000 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?

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?

The worksheet is a useful step in preparing adjusting entries and the unadjusted trial balance.

The matching principle states that ________.

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

Financial statements can be prepared from the unadjusted trial balance.

The key differences between the cash basis and accrual basis of accounting can be explained by understanding the time period concept and the revenue recognition and matching principles.

Which of the following accounting elements does the matching principle help to match?

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

Accrued revenue is revenue that ________.

The depreciation method that allocates an equal amount of depreciation to each year is called the straight-line method.

On July 1,Delta Company prepaid rent for an equipment storage building.Delta paid $20,000 to rent the building from July 1 through the end of the year.Prepare the journal entry needed on July 1 when the payment is made.(Ignore explanation).Assume the deferred expense is initially recorded as an asset.

Adjusting entries are completed to ensure that all income statement accounts for the accounting period examined have been recorded and to update the balance sheet accounts.

The following extract was taken from the worksheet of Special Events Bakers for the year 2019. For the above information,determine the amount of Depreciation Expense for the equipment used in the business.

The accounting records of Mason Service Company include the following selected,unadjusted balances at June 30: Accounts Receivable,$2,700;Office Supplies,$1,800;Prepaid Rent,$3,600;Equipment,$15,000;Accumulated Depreciation - Equipment,$1,800;Salaries Payable,$0;Unearned Revenue,$2,400;Office Supplies Expense,$2,800;Rent Expense,$0;Salaries Expense,$15,000;Service Revenue,$40,500. The following data developed for adjusting entries are as follows: a.Service revenue accrued,$1,400 b.Unearned Revenue that has been earned,$800 c.Office Supplies on hand,$700 d.Salaries owed to employees,$1,800 e.One month of prepaid rent has expired,$1,200 f.Depreciation on equipment,$1,500 Journalize the adjusting entries.Omit explanations.

Hudson Landscaping Service bought equipment for $10,800 on January 1,2019.It has an estimated useful life of five years and zero residual value.Hudson uses the straight-line method to calculate depreciation and records depreciation expense in the books at the end of every month.As of June 30,2019,the book value of this equipment shown on its balance sheet will be ________.

Get Away,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.Prepare the journal entry for collection of cash in May.(Ignore explanation).Assume the magazine initially records a liability for the subscription revenue.