Question 1

For each of the following transactions, indicate the direction of effects of the adjusting entry on the elements of the balance sheet and income statement. Using the following format, indicate + for increase, and - for decrease, and NE for no effect. Do not leave any blank spaces.
Transactions:
A. Wages of $5,800 have been earned, but not paid to employees at the end of the year.
B. Supplies in the amount of $2,000 were used during the year, which are currently recorded in the office supplies (inventory) account.
C. Interest has accrued on a note payable.

Accepted Answer

The answer of For each of the following transactions, indicate...

Question 2

On September 1, 2014, Fast Track, Inc. was started with $30,000 invested by the owners as contributed capital. On September 30, 2014, the accounting records contained the following amounts:
Required:
Prepare a statement of stockholders' equity for September, the first month of operation. Ignore income taxes.

Accepted Answer

The answer of On September 1, 2014, Fast Track, Inc....

Question 3

On December 31, 2014, the manager of Jordan Creek Apartments noticed that four tenants had not paid their December rent amounting to $500 each. What is the adjusting entry required on December 31, 2014?

Accepted Answer

The answer of On December 31, 2014, the manager of...

Question 4

Determine the effect of the following errors on the financial statements. Code your answers as follows and do not leave any blank spaces:
O: If the error results in an overstatement of the financial statement component.
U: If the error results in an understatement of the financial statement component.
N. If the error does not affect the financial statement component.
Error 1: A company failed to record accrued wage expense at year-end.
Revenues_____
Expenses_____
Net income_____
Assets_____
Liabilities_____
Stockholders' equity_____
Error 2: A company failed to accrue revenue earned at year-end.
Revenues_____
Expenses_____
Net income_____
Assets_____
Liabilities_____
Stockholders' equity_____
Error 3: A company recorded revenue when cash was received from a customer for services to be provided in the future.
Revenues_____
Expenses_____
Net income_____
Assets_____
Liabilities_____
Stockholders' equity_____

Accepted Answer

The answer of Determine the effect of the following errors...

Question 5

Explain how adjusting entries provide for potential manipulation by managers. In addition, discuss how compensation arrangements may result in incentives for such manipulation to occur.

Accepted Answer

The answer of Explain how adjusting entries provide for potential...

Question 6

The adjusted trial balance of Tahoe Company at the end of the accounting year, December 31, 2014, showed the following:
Required:
A. Prepare all the required closing entries for Tahoe Company at December 31, 2014.
B. Calculate the 2014 ending balance in retained earnings.

Accepted Answer

The answer of The adjusted trial balance of Tahoe Company...

Question 7

Determine the effect of the following errors on the financial statements. Code your answers as follows and do not leave any blank spaces:
O: If the error results in an overstatement of the financial statement component.
U: If the error results in an understatement of the financial statement component.
N. If the error does not affect the financial statement component.
Error 1: A company failed to adjust the prepaid insurance account for insurance that was used during the period.
Revenues_____
Expenses_____
Net income_____
Assets_____
Liabilities_____
Stockholders' equity_____
Error 2: A company failed to record depreciation expense at year-end.
Revenues_____
Expenses_____
Net income_____
Assets_____
Liabilities_____
Stockholders' equity_____
Error 3: A company did not adjust the unearned revenue account for revenue earned during the year.
Revenues_____
Expenses_____
Net income_____
Assets_____
Liabilities_____
Stockholders' equity_____

Accepted Answer

The answer of Determine the effect of the following errors...

Question 8

Modern Mother Magazine (MMM) has received cash subscriptions on April 1, 2014 in the amount of $3,600,000 for the next three years. The year-end for MMM is December 31, 2014. Magazine delivery occurs monthly and started on April 1, 2014. These were the only subscription sales for the year.
Required:
Answer the following questions for the year ended December 31, 2014.
A. What amount of cash should be reported for the year on the statement of cash flows?
B. What amount of subscriptions revenue should be reported on the income statement?
C. What amount would be reported as unearned subscriptions revenue on the balance sheet as of December 31, 2014?

Accepted Answer

The answer of Modern Mother Magazine (MMM) has received cash...

Question 9

The results or a balance on one financial statement may affect the results or a balance on another financial statement.
Required:
Prepare a response to the following items.
A. Describe how the income statement is related to the statement of stockholders' equity.
B. Describe how the statement of stockholders' equity is related to the balance sheet.
C. Describe how the statement of cash flows is related to the balance sheet.

Accepted Answer

The answer of The results or a balance on one...

Question 10

At December 31, 2014, the following adjusting entries were recorded in the accounts of ABD Company:
There were no other accrued receivables or payables on ABD's books in 2014.
Required:
Calculate the balances in the following accounts immediately after the closing entries were posted.

Accepted Answer

The answer of At December 31, 2014, the following adjusting...

Question 11

On September 1, 2014, Fast Track, Inc. was started with $30,000 invested by the owners as contributed capital. On September 30, 2014, the accounting records contained the following amounts:
Required:
Prepare a balance sheet for Fast Track, Inc. as of September 30, 2014.

Accepted Answer

The answer of On September 1, 2014, Fast Track, Inc....

Question 12

On July 1, 2014, Bass Company paid a two-year insurance premium. On that date the following journal entry was made:
The annual accounting period ends on December 31, 2014.
Required:
A. How much of the premium should be reported as expense on the 2014 income statement?
B. What is the amount of prepaid insurance that should be reported on the balance sheet at December 31, 2014?
C. Prepare the adjusting entry that should be made on December 31, 2014, assuming no adjusting entries have been made during the year.

Accepted Answer

The answer of On July 1, 2014, Bass Company paid...

Question 13

On January 1, 2014 the balance in the prepaid insurance account was $2,500. On December 31, 2014, after the 2014 adjusting entries were made, the balance of the prepaid insurance account was $1,200. During 2014, cash payments for insurance premiums amounted to $5,000, which was debited to the prepaid insurance account. Prepare the adjusting entry, which must have been made at December 31, 2014.

Accepted Answer

The answer of On January 1, 2014 the balance in...

Question 14

Air Cargo Company recorded the following adjusting entries at the end of the accounting year, December 31, 2014:
Before these adjusting entries were recorded, a partial unadjusted trial balance reflected the following:
Required:
Prepare the closing entries for Air Cargo Company at December 31, 2014.

Accepted Answer

The answer of Air Cargo Company recorded the following adjusting...

Question 15

What does the total asset turnover ratio measure and how is it calculated? Give two examples of transactions that decrease the ratio.

Accepted Answer

The answer of What does the total asset turnover ratio...

Question 16

On September 1, 2014, Fast Track, Inc. was started with $30,000 invested by the owners as contributed capital. On September 30, 2014, the accounting records contained the following amounts:
Required:
Prepare a single-step income statement for September for the first month of Fast Track's operation. Ignore income taxes.

Accepted Answer

The answer of On September 1, 2014, Fast Track, Inc....

Quiz 4: Adjustments, Financial Statements, and the Quality of Earnings

On December 31, 2014, the manager of Jordan Creek Apartments noticed that four tenants had not paid their December rent amounting to $500 each. What is the adjusting entry required on December 31, 2014?

Explain how adjusting entries provide for potential manipulation by managers. In addition, discuss how compensation arrangements may result in incentives for such manipulation to occur.

The adjusted trial balance of Tahoe Company at the end of the accounting year, December 31, 2014, showed the following: Required: A. Prepare all the required closing entries for Tahoe Company at December 31, 2014. B. Calculate the 2014 ending balance in retained earnings.

At December 31, 2014, the following adjusting entries were recorded in the accounts of ABD Company: There were no other accrued receivables or payables on ABD's books in 2014. Required: Calculate the balances in the following accounts immediately after the closing entries were posted.

On September 1, 2014, Fast Track, Inc. was started with $30,000 invested by the owners as contributed capital. On September 30, 2014, the accounting records contained the following amounts: Required: Prepare a balance sheet for Fast Track, Inc. as of September 30, 2014.

What does the total asset turnover ratio measure and how is it calculated? Give two examples of transactions that decrease the ratio.