Question 1

Based on the unadjusted trial balance for Highlight Styling and the adjusting information given below,prepare the adjusting journal entries for Highlight Styling.
Highlight Stylings' unadjusted trial balance for the current year follows:  Additional information:
a.An insurance policy examination showed $1,040 of expired insurance.
b.An inventory count showed $210 of unused shop supplies still available.
c.Depreciation expense on shop equipment,$350.
d.Depreciation expense on the building,$2,020.
e.A beautician is behind on space rental payments,and this $200 of accrued revenues was unrecorded at the time the trial balance was prepared.
f.$800 of the Unearned Rent account balance was still unearned by year-end.
g.The one employee,a receptionist,works a five-day workweek at $50 per day.The employee was paid last week but has worked four days this week for which she has not been paid.
h.Three months' property taxes,totaling $450,have accrued.This additional amount of property taxes expense has not been recorded.
i.One month's interest on the note payable,$600,has accrued but is unrecorded.

Accepted Answer

The answer of Based on the unadjusted trial balance for...

Question 2

On May 1,a two-year insurance policy was purchased for $18,000 with coverage to begin immediately.What is the amount of insurance expense that would appear on the company's income statement for the first year ended December 31?

Accepted Answer

A)  $750.
B)  $5,270.
C)  $6,000.
D)  $6,750.
E)  $18,000.F) None of the above
G) A) and E)

Question 3

On December 1,Simpson Marketing Company received $3,600 from a customer for a marketing plan to be completed January 31 of the following year.The cash receipt was recorded as unearned fees.The adjusting entry for the year ended December 31 would include:

Accepted Answer

A)  a debit to Earned Fees for $3,600.
B)  a debit to Unearned Fees for $1,800.
C)  a credit to Unearned Fees for $1,800.
D)  a debit to Earned Fees for $1,800.
E)  a credit Earned Fees for $3,600.F) D) and E)
G) C) and E)

Question 4

Holman Company owns equipment with an original cost of $95,000 and an estimated salvage value of $5,000 that is being depreciated at $15,000 per year using the straight-line depreciation method.The adjusting entry needed to record annual depreciation is:

Accepted Answer

A)  Debit Depreciation Expense,$15,000;credit Equipment,$15,000.
B)  Debit Equipment,$15,000;credit Accumulated Depreciation,$15,000.
C)  Debit Depreciation Expense,$10,000;credit Accumulated Depreciation,$10,000.
D)  Debit Depreciation Expense,$10,000;credit Equipment,$10,000.
E)  Debit Depreciation Expense,$15,000;credit Accumulated Depreciation,$15,000.F) B) and D)
G) C) and D)

Question 5

The accrual basis of accounting:

Accepted Answer

A)  Is generally accepted for external reporting because it is more useful than cash basis for most business decisions.
B)  Is flawed because it gives complete information about cash flows.
C)  Recognizes revenues when received in cash.
D)  Recognizes expenses when paid in cash.
E)  Eliminates the need for adjusting entries at the end of each period.F) C) and E)
G) C) and D)

Question 6

A contra account is an account linked with another account;it is added to that account to show the proper amount for the item recorded in the associated account.

Accepted Answer

A) True 
 B)False

Question 7

It is acceptable to record cash received in advance of providing products or services to revenue accounts if an adjusting entry is made at the end of the period to bring the liability account balance to the correct unearned amount.

Accepted Answer

A) True 
 B)False

Question 8

Financial statements can be prepared directly from the information in the adjusted trial balance.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements is incorrect?

Accepted Answer

A)  Adjustments to prepaid expenses and unearned revenues involve previously recorded assets and liabilities.
B)  Accrued expenses and accrued revenues involve assets and liabilities that had not previously been recorded.
C)  Adjusting entries can be used to record both accrued expenses and accrued revenues.
D)  Prepaid expenses,depreciation,and unearned revenues often require adjusting entries to record the effects of the passage of time.
E)  Adjusting entries affect only balance sheet accounts.F) B) and D)
G) All of the above

Question 10

An adjusting entry could be made for each of the following except:

Accepted Answer

A)  Prepaid expenses.
B)  Depreciation.
C)  Owner investments.
D)  Unearned revenues.
E)  Accrued expenses.F) B) and E)
G) A) and E)

Question 11

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

Accepted Answer

The answer of Show the December 31 adjusting entry to...

Question 12

All of the following are true regarding prepaid expenses except:

Accepted Answer

A)  They are paid for in advance of receiving their benefits.
B)  They are assets.
C)  When they are used,their costs become expenses.
D)  The adjusting entry for prepaid expenses increases expenses and decreases liabilities.
E)  The adjusting entry for prepaid expenses increases expenses and decreases assets.F) All of the above
G) A) and B)

Question 13

On October 1,Goodwell Company rented warehouse space to a tenant for $2,500 per month and received $12,500 for five months' rent in advance on that date.The collection was credited to the Unearned Rent account.The company's annual accounting period ends on December 31.The Unearned Rent account balance at the end of December,after adjustment,should be:

Accepted Answer

A)  $5,000.
B)  $7,500.
C)  $12,500.
D)  $2,500.
E)  $10,000.F) B) and C)
G) All of the above

Question 14

A company purchased new furniture at a cost of $14,000 on September 30.The furniture is estimated to have a useful life of 8 years and a salvage value of $2,000.The company uses the straight-line method of depreciation.What is the book value of the furniture on December 31 of the first year?

Accepted Answer

A)  $13,562.50
B)  $12,250.00
C)  $12,500.00
D)  $13,500.00
E)  $13,625.00F) B) and C)
G) A) and E)

Question 15

A salary owed to employees is an example of an accrued expense.

Accepted Answer

A) True 
 B)False

Question 16

Assuming unearned revenues are originally recorded in balance sheet accounts,the adjusting entry to record earning of unearned revenue is:

Accepted Answer

A)  Increase an expense;increase a liability.
B)  Increase an asset;increase revenue.
C)  Decrease a liability;increase revenue.
D)  Increase an expense;decrease an asset.
E)  Increase an expense;decrease a liability.F) A) and B)
G) C) and D)

Question 17

If a company records prepayment of expenses in an asset account,the adjusting entry when all or part of the prepaid asset is used or expired would:

Accepted Answer

A)  Result in a debit to an expense and a credit to an asset account.
B)  Cause an adjustment to prior expense to be overstated and assets to be understated.
C)  Cause an accrued liability account to exist.
D)  Result in a debit to a liability and a credit to an asset account.
E)  Decrease cash.F) None of the above
G) A) and C)

Question 18

On December 31,2015 Winters Company's Prepaid Rent account had a balance before adjustment of $6,000.Three months' rent was paid in advance on December 1.The adjusting entry needed on December 31 is:

Accepted Answer

A)  Debit Prepaid Rent $6,000;credit Cash $6,000.
B)  Debit Rent Expense $2,000;credit Accounts Payable $2,000.
C)  Debit Rent Expense $2,000;credit Prepaid Rent $2,000.
D)  Debit Cash $2,000;credit Prepaid Rent $2,000.
E)  Debit Rent Expense $6,000;credit Accounts Payable $6,000.F) None of the above
G) A) and E)

Question 19

All plant assets,including land,are depreciated.

Accepted Answer

A) True 
 B)False

Question 20

On January 1,Imlay Company purchases manufacturing equipment costing $95,000 that is expected to have a five-year life and an estimated salvage value of $5,000.Imlay uses the straight-line depreciation method to allocate costs.The adjusting entry needed on December 31 of the first year is:

Accepted Answer

A)  Debit Depreciation Expense,$9,000;credit Accumulated Depreciation,$9,000.
B)  Debit Depreciation Expense,$18,000;credit Accumulated Depreciation,$18,000.
C)  Debit Depreciation Expense,$90,000;credit Accumulated Depreciation,$90,000.
D)  Debit Depreciation Expense,$18,000;credit Equipment,$18,000.
E)  Debit Depreciation Expense,$9,000;credit Equipment,$9,000.F) A) and E)
G) B) and E)

Exam 3: Adjusting Accounts and Preparing Financial Statements

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

Correct Answer
verified

Which of the following statements is incorrect?

Correct Answer
verified

An adjusting entry could be made for each of the following except:

Correct Answer
verified

It is acceptable to record cash received in advance of providing products or services to revenue accounts if an adjusting entry is made at the end of the period to bring the liability account balance to the correct unearned amount.

Correct Answer
verified

The accrual basis of accounting:

Correct Answer
verified

Assuming unearned revenues are originally recorded in balance sheet accounts,the adjusting entry to record earning of unearned revenue is:

Correct Answer
verified

If a company records prepayment of expenses in an asset account,the adjusting entry when all or part of the prepaid asset is used or expired would:

Correct Answer
verified

Financial statements can be prepared directly from the information in the adjusted trial balance.

Correct Answer
verified

Correct Answer
verified

All plant assets,including land,are depreciated.

Correct Answer
verified

A salary owed to employees is an example of an accrued expense.

Correct Answer
verified

All of the following are true regarding prepaid expenses except:

Correct Answer
verified

On December 31,2015 Winters Company's Prepaid Rent account had a balance before adjustment of $6,000.Three months' rent was paid in advance on December 1.The adjusting entry needed on December 31 is:

Correct Answer
verified

A company purchased new furniture at a cost of $14,000 on September 30.The furniture is estimated to have a useful life of 8 years and a salvage value of $2,000.The company uses the straight-line method of depreciation.What is the book value of the furniture on December 31 of the first year?

Correct Answer
verified

On January 1,Imlay Company purchases manufacturing equipment costing $95,000 that is expected to have a five-year life and an estimated salvage value of $5,000.Imlay uses the straight-line depreciation method to allocate costs.The adjusting entry needed on December 31 of the first year is:

Correct Answer
verified

Holman Company owns equipment with an original cost of $95,000 and an estimated salvage value of $5,000 that is being depreciated at $15,000 per year using the straight-line depreciation method.The adjusting entry needed to record annual depreciation is:

Correct Answer
verified

On May 1,a two-year insurance policy was purchased for $18,000 with coverage to begin immediately.What is the amount of insurance expense that would appear on the company's income statement for the first year ended December 31?

Correct Answer
verified

Correct Answer
verified

On December 1,Simpson Marketing Company received $3,600 from a customer for a marketing plan to be completed January 31 of the following year.The cash receipt was recorded as unearned fees.The adjusting entry for the year ended December 31 would include:

Correct Answer
verified

A contra account is an account linked with another account;it is added to that account to show the proper amount for the item recorded in the associated account.

Correct Answer
verified

Exam 3: Adjusting Accounts and Preparing Financial Statements

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

Correct AnswerverifiedShow Answer

Which of the following statements is incorrect?

Correct AnswerverifiedShow Answer

An adjusting entry could be made for each of the following except:

Correct AnswerverifiedShow Answer

It is acceptable to record cash received in advance of providing products or services to revenue accounts if an adjusting entry is made at the end of the period to bring the liability account balance to the correct unearned amount.

Correct AnswerverifiedShow Answer

The accrual basis of accounting:

Correct AnswerverifiedShow Answer

Assuming unearned revenues are originally recorded in balance sheet accounts,the adjusting entry to record earning of unearned revenue is:

Correct AnswerverifiedShow Answer

If a company records prepayment of expenses in an asset account,the adjusting entry when all or part of the prepaid asset is used or expired would:

Correct AnswerverifiedShow Answer

Financial statements can be prepared directly from the information in the adjusted trial balance.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

All plant assets,including land,are depreciated.

Correct AnswerverifiedShow Answer

A salary owed to employees is an example of an accrued expense.

Correct AnswerverifiedShow Answer

All of the following are true regarding prepaid expenses except:

Correct AnswerverifiedShow Answer

On December 31,2015 Winters Company's Prepaid Rent account had a balance before adjustment of $6,000.Three months' rent was paid in advance on December 1.The adjusting entry needed on December 31 is:

Correct AnswerverifiedShow Answer

A company purchased new furniture at a cost of $14,000 on September 30.The furniture is estimated to have a useful life of 8 years and a salvage value of $2,000.The company uses the straight-line method of depreciation.What is the book value of the furniture on December 31 of the first year?

Correct AnswerverifiedShow Answer

On January 1,Imlay Company purchases manufacturing equipment costing $95,000 that is expected to have a five-year life and an estimated salvage value of $5,000.Imlay uses the straight-line depreciation method to allocate costs.The adjusting entry needed on December 31 of the first year is:

Correct AnswerverifiedShow Answer

Holman Company owns equipment with an original cost of $95,000 and an estimated salvage value of $5,000 that is being depreciated at $15,000 per year using the straight-line depreciation method.The adjusting entry needed to record annual depreciation is:

Correct AnswerverifiedShow Answer

On May 1,a two-year insurance policy was purchased for $18,000 with coverage to begin immediately.What is the amount of insurance expense that would appear on the company's income statement for the first year ended December 31?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

On December 1,Simpson Marketing Company received $3,600 from a customer for a marketing plan to be completed January 31 of the following year.The cash receipt was recorded as unearned fees.The adjusting entry for the year ended December 31 would include:

Correct AnswerverifiedShow Answer

A contra account is an account linked with another account;it is added to that account to show the proper amount for the item recorded in the associated account.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified