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Exam 3: Adjusting Accounts for Financial Statements

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Question 51

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Incurred but unpaid expenses that are recorded during the adjusting process with a debit to an expense and a credit to a liability are:

A) Intangible expenses.
B) Prepaid expenses.
C) Unearned expenses.
D) Net expenses.
E) Accrued expenses.

F) D) and E)
G) C) and D)

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Question 52

Multiple Choice

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On November 1,Jasper Company loaned another company $100,000 at a 6.0% interest rate.The note receivable plus interest will not be collected until March 1 of the following year.The company's annual accounting period ends on December 31,and adjustments are only made at year-end.The adjusting entry needed on December 31 is:

A) No entry required.
B) Debit Interest Expense,$5,000; credit Interest Payable,$5,000.
C) Debit Interest Expense,$1,000; credit Note Payable,$1,000.
D) Debit Interest Receivable,$500; credit Interest Revenue,$500.
E) Debit Interest Receivable,$1,000; credit Interest Revenue,$1,000.

F) A) and E)
G) None of the above

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Question 53

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On April 1,Garcia Publishing Company received $1,548 from Otisco,Inc.for 36-month subscriptions to several different magazines.The company credited Unearned Fees for the amount received and the subscriptions started immediately.Assuming adjustments are only made at year-end,What is the adjusting entry that should be recorded by Garcia Publishing Company on December 31 of the second year?

Prepare general journal entries on December 31 to record the following unrelated year-end adjustments. a.Estimated depreciation on equipment for the year,$4,500. b.The Prepaid Insurance account has a $3,680 debit balance before adjustment.An examination of insurance policies shows $600 of insurance expired. c.The Prepaid Insurance account has a $2,400 debit balance before adjustment.An examination of insurance policies shows $950 of unexpired insurance. d.The company has three office employees who each earn $100 per day for a five-day workweek that ends on Friday.The employees were paid on Friday,December 26,and have worked full days on Monday,Tuesday,and Wednesday,December 29,30,and 31. e.On November 1,the company received 6 months' rent in advance from a tenant whose rent is $700 per month.The $4,200 was credited to the Unearned Rent account. f.The company collects rent monthly from its tenants.One tenant whose rent is $1,000 per month has not paid his rent for December.

On January 1,Eastern College received $1,200,000 from its students for the spring semester that it recorded in Unearned Tuition and Fees.The term spans four months beginning on January 2 and the college spreads the revenue evenly over the months of the term.Assuming the college prepares adjustments monthly,what amount of tuition revenue should the college recognize on February 28?

The adjusting entry to record the salaries earned due to employees for services provided but unpaid at the end of the accounting period affects the accounts in which of the following ways?

________ are required at the end of the accounting period because certain internal transactions and events remain unrecorded.

A company issued financial statements for the year ended December 31,but failed to include the following adjusting entries: A.Accrued interest revenue earned of $1,200. B.Depreciation expense of $4,000. C.Portion of prepaid insurance expired (an asset)used $1,100. D.Accrued taxes of $3,200. E.Revenues of $5,200,originally recorded as unearned,have been earned by the end of the year. Determine the correct amounts for the December 31 financial statements by completing the following table:

If all columns of a completed work sheet balance,you can be sure that no errors were made in its preparation.

On September 1,Kennedy Company loaned $100,000,at 12% annual interest,to a customer.Interest and principal will be collected when the loan matures one year from the issue date.Assuming adjustments are only made at year-end,what is the adjusting entry for accruing interest that Kennedy would need to make on December 31,the calendar year-end?

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,and only prepares adjustments at year-end.The adjusting entry needed to record annual depreciation is:

Adjusting entries are usually entered in the work sheet before they are entered in the general journal.

Which of the following accounts would be included in a post-closing trial balance?

The following information is available for Brendon Company before closing the accounts.What will be the amount in the Income Summary account that should be closed to Retained earnings?

What is the proper adjusting entry at December 31,the end of the accounting period,if the balance in the prepaid insurance account is $7,750 before adjustment,and the unexpired amount per analysis of policies is $3,250?

Truman had total assets of $149,501,000,net income of $6,276,090,and net sales of $209,203,000.Its profit margin was 3%.

The aim of a post-closing trial balance is to verify that (1)total debits equal total credits for temporary accounts,and (2)all temporary accounts have zero balances.

Which of the following is the usual final step in the accounting cycle?

Which of the following types of businesses might have an operating cycle longer than one year?

Describe the two alternate methods used to account for prepaid expenses.