Question 1

Juno Company had $500 of office supplies available at the beginning of the current year.During the year Juno Company purchased $2,750 worth of office supplies.On December 31 of this year $375 worth of office supplies remained.
a.Calculate the amount of Juno Company's office supplies expense for the current year.(Show your calculations. )
b.Prepare the journal entry to adjust the supplies account.

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Question 2

Using the table below,indicate the impact of the following errors made during the adjusting entry process.Use a "+" for overstatements,a "-" for understatements,and a "0" for no effect.The first one is provided as an example.

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Question 3

Given the table below,indicate the impact of the following errors made during the adjusting entry process.Use a "+" followed by the amount for overstatements,a "-" followed by the amount for understatements,and a "0" for no effect.The first one is done as an example.
Ex.Failed to recognize that $600 of unearned revenues,previously recorded as liabilities,had been earned by year-end.
1.Failed to accrue interest expense of $200.
2.Forgot to record $7,700 of depreciation on machinery.
3.Failed to accrue $1,300 of revenue earned but not collected.

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Question 4

On December 31,2015 Winters Company received a $385 bill for the purchase of supplies in December that it will not pay for until January 15.The adjusting entry needed on December 31 to accrue this cost is:

Accepted Answer

The adjusting entry needed on December 31 to accrue the cost of supplies that will not be paid for until January 15 is to debit Supplies (an expense account) for $385 and credit Accounts Payable for $385. This will record the expense in the current year and create a liability for the amount owed. Option B is incorrect because it would decrease supplies and increase the liability, while the actual cost has not been paid yet. Option C is incorrect because cash has not been paid out or received. Option D is incorrect because it would decrease cash, while no cash has been paid. Option E is incorrect because it would increase supplies (an asset account), which is not accurate since the supplies have already been consumed as an expense.

Question 5

On December 1,Casualty Insurance Company borrowed $50,000 at a 6.0% interest rate from One Mutual Bank.The note payable plus interest will not be paid until April 1 of the following year.The company's annual accounting period ends on December 31.The adjusting entry needed on December 31 is:

Accepted Answer

The adjusting entry needed on December 31 is to record the interest expense incurred from December 1 to December 31. Since the annual interest rate is 6.0%, the monthly interest rate is 6.0%/12 = 0.5%. Therefore, the interest expense from December 1 to December 31 is $50,000 x 0.5% x 1/12 = $250. The entry should be a debit to Interest Expense for $250 and a credit to Interest Payable for $250. The note payable is not affected by this entry, as it will be recorded separately on the balance sheet.

Question 6

Rogers Company's employees are paid a total of $1,600 per day for a 5-day workweek.The employees are paid each Friday.This year the accounting period ends on Tuesday.Prepare the December 31 year-end adjusting journal entry Rogers Company should make to accrue wages.

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Question 7

On December 31,2015 Carmack Company received a $215 utility bill for December that it will not pay until January 15.The adjusting entry needed on December 31 to accrue this expense is:

Accepted Answer

The adjusting entry needed to accrue the utility expense is to debit the Utilities Expense account and credit the Accounts Payable account. This will recognize the expense in the current period and record the obligation to pay in the following period when the bill is paid. Option A is the correct choice as it debits the expense account and credits the liability account.

Question 8

A company's employees earn a total of $10,000 per week for a 5-day week that begins on Monday.December 31 of Year 1 is a Monday,and all 20 employees worked that day.
a)Prepare the required adjusting journal entry to record accrued salaries on December 31,Year 1.
b)Prepare the journal entry to record the payment of salaries on January 4,Year 2.

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Question 9

Which of the following statements is incorrect?

Accepted Answer

Financial statements should not be prepared directly from information in the unadjusted trial balance because adjustments may be necessary to ensure accurate financial reporting. The adjusted trial balance reflects these adjustments and should be used to prepare the financial statements.

Question 10

Glisten Co.leases an office to a tenant at the rate of $3,000 per month.The tenant contacted Glisten and arranged to pay the rent for December on January 8 of the following year.Glisten agrees to this arrangement.
a. )Prepare the journal entry that Glisten must make at year ended December 31 to record the accrued rent revenue.
b. )Prepare the journal entry to record the receipt of the rent on January 8 of the following year.

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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.

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Question 12

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

The adjusting entry needed on December 31 is to recognize the portion of the prepaid rent that has been used up or expired, which is equal to three months' worth of rent. This means Rent Expense should be debited (to recognize the expense) and Prepaid Rent should be credited (to reduce the balance to the amount that has not yet been used up). Therefore, the correct entry is Debit Rent Expense $2,000; credit Prepaid Rent $2,000. Option A cannot be correct because it would reverse the original entry, which recognized the prepayment. Option B is incorrect because it involves creating an account payable, which is not relevant since the rent was already paid in cash. Option D is incorrect because it would increase the balance of cash, which is not appropriate for an adjusting entry. Option E is incorrect because it involves creating an account payable, which is not relevant since the rent was already paid in cash.

Question 13

Prior to recording adjusting entries on December 31,a company's Office Supplies account had an $780 debit balance.A physical count of the supplies showed $425 of unused supplies available as of December 31.Prepare the required adjusting entry.

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Question 14

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.

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Question 15

On December 14 Branch Company received $3,100 cash for consulting services that will be completed on January 12.Branch records all such prepayments by customers in a liability account.Prepare the January 12 adjusting journal entry.

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Question 16

On December 31,2015 Carmack Company's Prepaid Insurance account had a balance before adjustment of $6,000.The insurance was purchased on July 1 of the same year for one year of insurance coverage.The adjusting entry needed on December 31 is:

Accepted Answer

The adjusting entry needed on December 31 is to record the amount of insurance expense that has been used up or "expired" since the purchase of the insurance. Since half of the insurance period has passed between July 1 and December 31, only half of the prepaid insurance amount remains as an asset on December 31. Therefore, the correct entry is to debit Insurance Expense for $3,000 (half of the original $6,000 amount) and credit Prepaid Insurance for $3,000.

Question 17

Record the December 31 adjusting entries for the following transactions and events in general journal form.Assume that December 31 is the end of the annual accounting period.
a.The Prepaid Insurance account shows a debit balance of $2,340,representing the cost of a two-year fire insurance policy that was purchased on October 1 of the current year and has not been adjusted to-date.
b.The Store Supplies account has a debit balance of $400;a year-end inventory count reveals $80 of supplies still on hand.
c.On November 1 of the current year,Rent Earned was credited for $1,500.This amount represented the rent earned for a three-month period beginning November 1.
d.Estimated depreciation on store equipment is $600.
e.Accrued salaries amount to $1,400.

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Question 18

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.

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Question 19

On December 31,Chu Company had performed $3,000 of management services for clients that had not yet been billed.Prepare Chu's adjusting entry to record these fees earned.

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Question 20

During the current year ended December 31,clients paid fees in advance for accounting services amounting to $15,000.These fees were recorded in an account called Unearned Accounting Fees.If $3,500 of these fees remains unearned on December 31 of this year,present the December 31 adjusting entry to bring the accounts up to date.

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Quiz 3: Adjusting Accounts and Preparing Financial Statements