Question 1

The purchase of a delivery truck for $9,500 (on credit) was posted as debit to Delivery Trucks for $9,500, and a debit to Notes Payable for $9,500.
What effect would this error have on the trial balance?

Accepted Answer

The answer of The purchase of a delivery truck for...

Question 2

The unadjusted Trial Balance for Tyler Company shows the following accounts (in alphabetical order) on December 31, 2019. Each account shown has a normal balance.
 Assuming the Trial Balance in balance, determine Tyler Company's Utilities Expense for 2019:

Accepted Answer

The answer of The unadjusted Trial Balance for Tyler Company...

Question 3

As of December 31, 2019, the Balance Sheet of Sparkling Products, Inc. contains the following items (in random order):
 Determine the amount of Equipment.

Accepted Answer

The answer of As of December 31, 2019, the Balance...

Question 4

M. Mabrey received $2,500 from a tenant on December 1 for five months' rent of an office. This rent was for December, January, February, March, and April.
If Mabrey debited Cash and credited Unearned Rental Income for $2,500 on December 1, what necessary adjustment would be made on December 31?

Accepted Answer

By December 31, one month of rent has been earned, so $500 should be recognized as rental income, reducing unearned rental income by the same amount.

Question 5

P. Disco received $2,400 from a tenant on December 1 for three months' rent of an office. This rent was for December, January, and February.
If Disco debited Cash and credited Unearned Rental Income for $2,400 on December 1, what necessary adjustment would be made on December 31?

Accepted Answer

On December 31, one month's rent ($800) has been earned, so Unearned Rental Income should be debited and Rental Income credited for $800.

Question 6

Early in the accounting period, a customer paid $1,500 for services in advance of receiving them; Cash was debited and Unearned Service Fees was credited for $1,500. At the end of the accounting period, two-thirds of the services paid for had yet to be performed.
The proper adjusting entry is:

Accepted Answer

Since one-third of the services have been performed, $500 should be recognized as earned revenue, reducing the Unearned Service Fees by $500.

Question 7

On September 1, Best Company began a contract to provide services to Dildwood Company for six months, with the total $10,800 payment to be made at the end of the six-month period. Equal services are provided each month. The firm uses the account Fees Receivable to reflect amounts due but not yet billed.
What proper adjusting entry would Best Company make on December 31, the end of the accounting period (no previous adjustment has been made)?

Accepted Answer

By December 31, four months of the service have been provided (September, October, November, December), so 4/6 of the total payment is earned, which is $10,800 * (4/6) = $7,200. The correct adjusting entry increases Fees Receivable for the amount earned but not yet billed and recognizes the revenue by increasing Service Fees Earned.

Question 8

On December 31, the end of the accounting period, $5,300 in service fees had been earned but not billed or received. The firm uses the account Fees Receivable to reflect amounts due but not yet billed.
The proper adjusting entry would be:

Accepted Answer

The correct adjusting entry to record revenue that has been earned but not yet billed or received is to debit Fees Receivable for $5,300 and credit Service Fees Earned for $5,300. This reflects the increase in assets (Fees Receivable) and the increase in earned revenue.

Question 9

Smith Company paid $26,400 for a four-year insurance policy on September 1 and recorded the $26,400 as a debit to Prepaid Insurance and a credit to Cash.
What adjusting entry should Smith make on December 31, the end of the accounting period (no previous adjustment has been made)?

Accepted Answer

The correct adjusting entry is to debit Insurance Expense and credit Prepaid Insurance for the amount of insurance that has expired, which is $2,200 (4 months of a 48-month policy, or $26,400 / 48 months * 4 months). This recognizes the expense incurred during the period and reduces the prepaid asset accordingly.

Question 10

Williams Company paid $24,000 for a two-year insurance policy on October 1 and recorded the $24,000 as a debit to Prepaid Insurance and a credit to Cash.
What adjusting entry should Williams make on December 31, the end of the accounting period (no previous adjustment has been made)?

Accepted Answer

The insurance policy covers two years (24 months) at a cost of $24,000, so the monthly cost is $1,000 ($24,000 / 24 months). From October 1 to December 31 is three months, so $3,000 ($1,000 x 3 months) of the policy has been used. The adjusting entry should recognize this expense by debiting Insurance Expense and crediting Prepaid Insurance for $3,000.

Question 11

Office Supplies had a beginning balance of $8,000. During the month, purchases of office supplies totaling $2,000 were debited to the Office Supplies account.
If $3,000 worth of office supplies is still on hand at month-end, what is the proper adjusting entry?

Accepted Answer

The answer of Office Supplies had a beginning balance of...

Question 12

Printing Supplies had a beginning balance of $4,000. During the month, purchases of printing supplies totaling $3,000 were debited to the Printing Supplies account.
If $2,000 worth of printing supplies is still on hand at month-end, what is the proper adjusting entry?

Accepted Answer

The beginning balance plus purchases equals $7,000. With $2,000 on hand, $5,000 has been used, so the adjusting entry is to debit Printing Supplies Expense and credit Printing Supplies for $5,000.

Question 13

During their first year, Smith and Associates bought $16,000 worth of supplies for their CPA firm. When purchased, the supplies were debited to Supplies and credited to Accounts Payable.
What adjusting entry would Smith and Associates make if $4,000 worth of supplies were on hand at year-end?

Accepted Answer

The correct adjusting entry is to recognize the supplies used during the year. Since $4,000 worth of supplies are still on hand, it means $12,000 ($16,000 - $4,000) worth of supplies were used. The entry debits Supplies Expense and credits Supplies for $12,000, reflecting the consumption of supplies.

Question 14

The Supplies account balance at the end of the period is $22,000. Supplies totaling $18,800 have been purchased during the period and debited to Supplies. A physical count shows $5,000 worth of supplies on hand at the end of the period.
The proper adjusting entry is:

Accepted Answer

The correct adjusting entry is to recognize the supplies used during the period. The beginning balance was $22,000, and purchases were $18,800, making the total available supplies $40,800. With $5,000 left, $35,800 worth of supplies were used. However, the options provided do not accurately reflect this calculation, and my initial calculation was incorrect. The correct calculation for supplies expense should be the beginning balance plus purchases minus the ending inventory. Thus, the correct entry should debit Supplies Expense and credit Supplies for the amount used during the period, which is not accurately represented in any of the given choices. Therefore, the correct answer based on the provided options and the correct calculation should be to recognize the expense for the supplies used, which is calculated as the beginning balance plus purchases minus the ending physical count. However, none of the options correctly reflects this calculation, indicating a mistake in my initial response. The correct adjustment is to record the amount of supplies used, which is the beginning balance plus purchases minus the ending balance. This is calculated as $22,000 + $18,800 - $5,000 = $35,800 used, which should be recognized as an expense. However, this calculation and explanation reveal an error in my initial choice selection based on the provided options.

Question 15

West Company signed a one-year lease on April 1 and paid the $11,400 total year's rent in advance. West recorded the transaction as a debit to Prepaid Rent and a credit to Cash.
What adjusting entry should West make on December 31 (no previous adjustment has been made)?

Accepted Answer

Rent Expense should be recognized for the period the space has been used. From April 1 to December 31 is 9 months. The monthly rent is $11,400 / 12 = $950. For 9 months, the rent expense is $950 * 9 = $8,550. The adjusting entry increases Rent Expense and decreases Prepaid Rent by $8,550.

Question 16

Forrester Company signed a two-year lease on July 1 and paid the $17,400 total rent in advance. Forrester recorded the transaction as a debit to Prepaid Rent and a credit to Cash.
What adjusting entry should Forrester make on December 31 (no previous adjustment has been made)?

Accepted Answer

The total rent for two years is $17,400, so the annual rent is $8,700. Since the lease started on July 1, only six months of rent should be recognized by December 31, which is $8,700 / 2 = $4,350. Therefore, the adjusting entry should debit Rent Expense and credit Prepaid Rent for $4,350 to reflect the rent expense for six months.

Question 17

Likert Company calculates that interest of $900 has accrued at December 31 on outstanding notes payable. How should Likert record this on December 31?

Accepted Answer

The correct way to record accrued interest on outstanding notes payable is to debit Interest Expense for the amount of interest that has accrued and to credit Interest Payable for the same amount. This reflects the expense incurred and the liability owed but not yet paid.

Question 18

Assume December 31 is a Wednesday. Wages are paid every Friday, and the weekly payroll (for five days) amounts to $3,000.
To record the correct amount of expense for December, the firm makes the following entry on December 31:

Accepted Answer

Since December 31 is a Wednesday, there are three workdays in that week (Monday, Tuesday, and Wednesday) that fall in December. The weekly payroll is $3,000 for five days, so each day's payroll is $600 ($3,000/5). For three days, the payroll expense is $1,800 ($600 x 3). Therefore, the correct entry to record the expense for December is to debit Wages Expense and credit Wages Payable for $1,800.

Question 19

Benson Company calculates it has earned (but not yet collected or recorded) interest of $525 at December 31 on outstanding notes receivable.
How should Benson record this on December 31?

Accepted Answer

The correct way to record earned but not yet collected interest is to debit Interest Receivable for $525 and credit Interest Income for $525. This records the interest as an asset (receivable) and recognizes the income earned during the period.

Question 20

Assume December 31 is a Monday. Wages are paid every Friday, and the weekly payroll (for five days) amounts to $6,000.
To record the correct amount of expense for December, the firm makes the following entry on December 31:

Accepted Answer

Since December 31 is a Monday, only one day's wages need to be recorded as an expense for December, which is $1,200 ($6,000/5 days).

Quiz 13: Appendix A: The Language of Accountants: Debits and Credits

The purchase of a delivery truck for $9,500 (on credit) was posted as debit to Delivery Trucks for $9,500, and a debit to Notes Payable for $9,500. What effect would this error have on the trial balance?

The unadjusted Trial Balance for Tyler Company shows the following accounts (in alphabetical order) on December 31, 2019. Each account shown has a normal balance. Assuming the Trial Balance in balance, determine Tyler Company's Utilities Expense for 2019:

As of December 31, 2019, the Balance Sheet of Sparkling Products, Inc. contains the following items (in random order) : Determine the amount of Equipment.

M. Mabrey received $2,500 from a tenant on December 1 for five months' rent of an office. This rent was for December, January, February, March, and April. If Mabrey debited Cash and credited Unearned Rental Income for $2,500 on December 1, what necessary adjustment would be made on December 31?

P. Disco received $2,400 from a tenant on December 1 for three months' rent of an office. This rent was for December, January, and February. If Disco debited Cash and credited Unearned Rental Income for $2,400 on December 1, what necessary adjustment would be made on December 31?

Early in the accounting period, a customer paid $1,500 for services in advance of receiving them; Cash was debited and Unearned Service Fees was credited for $1,500. At the end of the accounting period, two-thirds of the services paid for had yet to be performed. The proper adjusting entry is:

On December 31, the end of the accounting period, $5,300 in service fees had been earned but not billed or received. The firm uses the account Fees Receivable to reflect amounts due but not yet billed. The proper adjusting entry would be:

Smith Company paid $26,400 for a four-year insurance policy on September 1 and recorded the $26,400 as a debit to Prepaid Insurance and a credit to Cash. What adjusting entry should Smith make on December 31, the end of the accounting period (no previous adjustment has been made) ?

Williams Company paid $24,000 for a two-year insurance policy on October 1 and recorded the $24,000 as a debit to Prepaid Insurance and a credit to Cash. What adjusting entry should Williams make on December 31, the end of the accounting period (no previous adjustment has been made) ?

Office Supplies had a beginning balance of $8,000. During the month, purchases of office supplies totaling $2,000 were debited to the Office Supplies account. If $3,000 worth of office supplies is still on hand at month-end, what is the proper adjusting entry?

Printing Supplies had a beginning balance of $4,000. During the month, purchases of printing supplies totaling $3,000 were debited to the Printing Supplies account. If $2,000 worth of printing supplies is still on hand at month-end, what is the proper adjusting entry?

During their first year, Smith and Associates bought $16,000 worth of supplies for their CPA firm. When purchased, the supplies were debited to Supplies and credited to Accounts Payable. What adjusting entry would Smith and Associates make if $4,000 worth of supplies were on hand at year-end?

The Supplies account balance at the end of the period is $22,000. Supplies totaling $18,800 have been purchased during the period and debited to Supplies. A physical count shows $5,000 worth of supplies on hand at the end of the period. The proper adjusting entry is:

West Company signed a one-year lease on April 1 and paid the $11,400 total year's rent in advance. West recorded the transaction as a debit to Prepaid Rent and a credit to Cash. What adjusting entry should West make on December 31 (no previous adjustment has been made) ?

Forrester Company signed a two-year lease on July 1 and paid the $17,400 total rent in advance. Forrester recorded the transaction as a debit to Prepaid Rent and a credit to Cash. What adjusting entry should Forrester make on December 31 (no previous adjustment has been made) ?

Likert Company calculates that interest of $900 has accrued at December 31 on outstanding notes payable. How should Likert record this on December 31?

Assume December 31 is a Wednesday. Wages are paid every Friday, and the weekly payroll (for five days) amounts to $3,000. To record the correct amount of expense for December, the firm makes the following entry on December 31:

Benson Company calculates it has earned (but not yet collected or recorded) interest of $525 at December 31 on outstanding notes receivable. How should Benson record this on December 31?

Assume December 31 is a Monday. Wages are paid every Friday, and the weekly payroll (for five days) amounts to $6,000. To record the correct amount of expense for December, the firm makes the following entry on December 31: