Question 1

Below are two related transactions for Golden Corporation.The annual accounting period ends December 31.Prepare the journal entry for each of the following transactions.No adjusting entries have been made during the year.
A.October 1, 2011--Golden Corporation borrowed $100,000 and signed a note providing for 8% interest.The principal and interest are due in one year (on September 30, 2012).
B.December 31, 2011--end of the annual accounting period.(If no entry is required, explain why).

Accepted Answer

The answer of Below are two related transactions for Golden...

Question 2

The comparative balance sheets of Titan Company for the years ended December 31,2010 and 2011,reported the following selected amounts:

$\begin{array}{l}
\begin{array} { l } 
\
\text { Assets: Office supplies inventory }\
\text { Unearned rent revenue }\
\end{array}
\begin{array} { l } 
2010 & 2011\
\hline \$ 2,000 & \$ 800 \
11,000 & 10,500
\end{array}
\end{array}$

The 2011 income statement reported the following: Rent revenue$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ 12,000
Office supplies expense$ \quad $$ \quad $15,000 Requirements:
A.Calculate the total amount of office supplies purchased during 2011.
B.Calculate the total amount of rent collected during 2011.
C.In what section of the statement of cash flows would the payments for office supplies appear?
D.In what section of the statement of cash flows would the collection for rents appear?

Accepted Answer

The answer of The comparative balance sheets of Titan Company...

Question 3

Lane Company is completing the accounting cycle at the end of its annual accounting period,December 31,2011.No adjusting entries have been made during the year so three adjusting entries must be made to update the accounts.The following accounts,selected from the company's chart of accounts,are to be used for this purpose.They are coded to the left for easy reference. $$\begin{array} { l l l l } 
\text { A. } & \text { Cash } & \text { I. } & \text { Unearned rent } \
\text { B. } & \text { Notes payable } & \text { J. } & \text { Rent expense } \
\text { C. } & \text { Interest receivable } & \text { K. } & \text { Wage expense } \
\text { D. } & \text { Machinery } & \text { L. } & \text { Depreciation expense } \
\text { E. } & \text { Accumulated depreciation } & \text { M. } & \text { Interest expense } \
\text { F. } & \text { Notes payable } & \text { N. } & \text { Interest revenue } \
\text { G. } & \text { Interest payable } & \text { O. } & \text { Rent revenue } \
\text { H. } & \text { Wages payable } & \text { P. } & \text { Some other account not listed }
\end{array}$$ You are to indicate the appropriate account code and amount for each of the required adjusting entries at December 31,2011.

Accepted Answer

The answer of Lane Company is completing the accounting cycle...

Question 4

Four transactions are given below that were completed during 2011 by Russell Company.You are to provide the adjusting entries required for Russell Company on December 31,2011.No adjusting entries were made during the year. Office supplies inventory $ \quad $$ \quad $1,000
$ \quad $Cash$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $1,000 At January 1,2011,the inventory of unused office supplies was $300.At December 31,2011,a physical count showed unused office supplies in the supply room amounting to $100.
C.On December 1,2011,Russell Company rented some office space to another party.Russell Company collected $900 rent for the period December 1,2011,to March 1,2012.The December 1 transaction was recorded as follows: Cash$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $900
$ \quad $Unearned rent revenue$ \quad $$ \quad $$ \quad $900 D.On July 1,2011,Russell Company borrowed $2,000 cash on a one-year,8% interest-bearing,note payable.The interest is payable on the due date,June 30,2012.The borrowing was recorded as follows on July 1,2011: Cash$ \quad $$ \quad $$ \quad $$ \quad $2,000
$ \quad $Notes payable $ \quad $$ \quad $2,000

Accepted Answer

The answer of Four transactions are given below that were...

Question 5

Below are four transactions that were completed during 2011 by Timber Lodge.The annual accounting period ends on December 31.Each transaction will require an adjusting entry at December 31,2011.You are to provide the 2011 adjusting entries required for Timber Lodge. $\begin{array}{lll}
\text { Prepaid insurance } & 8,000 & \
\text { Cash } & & 8,000
\end{array}$ B.On December 31,2011 a tenant renting some storage space from Timber Lodge had not paid the rent of $750 for December 2011.
C.On September 1,2011,Timber Lodge borrowed $25,000 cash and gave a one-year,10 percent,note payable.The interest is payable on the due date,August 31,2012.The September 1,2011 transaction was recorded as follows: Cash  $ \quad $$ \quad $25,000
$ \quad $Note payable  $ \quad $$ \quad $25,000 D.On October 1,2011,Timber Lodge collected $3,600 from a tenant for two years rent beginning October 1,2011.The $3,600 collection was recorded as follows: Cash$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $3,600
$ \quad $Unearned rent revenues$ \quad $$ \quad $$ \quad $$ \quad $3,600

Accepted Answer

The answer of Below are four transactions that were completed...

Question 6

On December 1,2011,Fleet Company paid $30,000 for three months rent and debited prepaid rent for $30,000; the rent payment was for three was for three months beginning December 1,2011.Prepare Fleet's adjusting entry required on December 31,2011.

Accepted Answer

As of December 31, 2011, one month of the rent period has passed, so Fleet Company needs to recognize the rent expense for the month of December. The monthly rent is $30,000 divided by 3 months, which equals $10,000 per month.
The adjusting entry required on December 31, 2011, would be to record the rent expense for one month and reduce the Prepaid Rent account accordingly. Here is the journal entry:
Date: December 31, 2011
Debit: Rent Expense $10,000
Credit: Prepaid Rent $10,000
 To record rent expense for the month of December and reduce the prepaid rent asset.
This entry reflects that $10,000 of the Prepaid Rent has now been used up, and it moves that amount from the balance sheet (where Prepaid Rent is reported) to the income statement (where Rent Expense is reported), thus matching the expense with the period in which it was incurred, in accordance with the matching principle of accounting.

Question 7

Johnson Corporation is completing the accounting information processing cycle at the end of the fiscal year,June 30,2010.Johnson has provided the following trial balances as of June 30,2010:
 
$\begin{array}{|l|r|r|r|r|}
\hline {\text { June } 30,2010} \
\hline {\text { Account Titles }} & {\text { Unadjusted Trial Balance }} & {\text { Adjusted Trial Balance }} \
& \text { Debit } & \text { Credit } &{\text { Debit }} & \text { Credit } \
\hline \text { Cash } & \$ 13,000 & & \$ 13,000 & \
\hline \text { Accounts receivable } & 1,500 & & 1,800 & \
\hline \text { Prepaid insurance } & 600 & & 200 & \
\hline \text { Equipment } & 60,000 & & 60,000 & \
\hline \text { Accumulated depreciation } & & \$ 16,500 & & \$ 22,000 \
\hline \text { Wages payable } & & & & 100 \
\hline \text { Capital stock } & & 25,000 & & 25,000 \
\hline \text { Retained earnings } & & 11,600 & & 11,600 \
\hline \text { Service revenues } & & 38,000 & & 38,300 \
\hline \text { Wage expense } & 16,000 & & 16,100 & \
\hline \text { Depreciation expense } & & & 5,500 & \
\hline \text { Insurance expense } & & & 400 & \
\hline \text { Totals } & \$ 91,100 & \$ 91,100 & \$ 97,000 & \$ 97,000 \
\hline
\end{array}$ Requirements:
A.Reconstruct the adjusting entries and give a brief explanation of each.
B.What is the amount of net income?
C.Calculate earnings per share (EPS)assuming 1,000 shares of common stock are outstanding.

Accepted Answer

The answer of Johnson Corporation is completing the accounting information...

Question 8

Center Company is completing the accounting cycle at the end of the annual accounting period,December 31,2011.No adjusting entries have been made during the year so three adjusting entries must be made at this date to update the accounts.The following accounts,selected from Center Company's chart of accounts,are to be used for this purpose.They are coded to the left for easy reference. $$\begin{array} { l l l l } 
\text { A. } & \text { Supplies expense } & \text { I. } & \text { Unearned rent } \
\text { B. } & \text { Supplies } & \text { J. } & \text { Rent expense } \
\text { C. } & \text { Interest receivable } & \text { K. } & \text { Wage expense } \
\text { D. } & \text { Equipment }&\text { L. } & \text { Depreciation expense } \
\text { E. } & \text { Accumulated depreciation } & \text { M. } & \text { Interest expense } \
\text { F. } & \text { Notes payable } & \text { N. } & \text { Interest revenue } \
\text { G. } & \text { Interest payable } & \text { O. } & \text { Rent revenue } \
\text { H. } & \text { Wages payable } & \text { P. } & \text { Some other account not listed }
\end{array}$$

Accepted Answer

The answer of Center Company is completing the accounting cycle...

Question 9

On November 1,2010,Bruce Company leased some of its office space to Fairlane Company and immediately collected twelve months rent in advance of $600,000.Bruce debited cash and credited unearned rent revenue for $600,000.Prepare the December 31,2010 adjusting entry Bruce should make in respect to the rent,assuming no adjusting entries have been made during the year.

Accepted Answer

The answer of On November 1,2010,Bruce Company leased some of...

Question 10

Three transactions are given below that were completed during 2011 by Story Company.Prepare the adjusting entries as of December 31,2011,assuming no adjusting entries have been made during the year. Prepaid rent$ \quad $$ \quad $12,600
$ \quad $Cash$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $12,600 B.On February 1,2011,Story Company purchased office supplies during the year that cost $700 and placed the supplies in a storeroom for use as needed.The purchase was recorded as follows: Office supplies inventory$ \quad $$ \quad $$ \quad $700
$ \quad $Cash$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $700 At December 31,2011,a count showed unused office supplies of $200 in the storeroom.There was no beginning inventory of supplies on hand.
C.On December 31,2011,Story Company owed employees $2,000 for wages earned during December.These wages had not been paid nor recorded.

Accepted Answer

The answer of Three transactions are given below that were...

Question 11

Describe the adjusted trial balance.

Accepted Answer

The answer of Describe the adjusted trial balance....

Question 12

For each of the following accounts you are to enter one capital letter in each cell which indicates for each account its normal characteristics. $\begin{array}{|l|l|l|l|l|}
\hline{\text { USE THE LETTER CODE GIVEN }} \
\hline {\text { TYPE OF ACCOUNT }} && {\begin{array}{c}
\text { CLOSING } \
\text { STATUS }
\end{array}} & \begin{array}{l}
\text { NORMAL } \
\text { BALANCE }
\end{array} &{\begin{array}{c}
\text { FINANCIAL } \
\text { STATEMENT }
\end{array}} \
\hline \text { A=Assets } & \text { L=Liabilities } & \text { C=Closed } & \text { D=Debt } & \text { B=Balance Sheet } \
\hline \text { R=Revenue } & \text { E=Expenses } & \text { N=Not Closed } & \text { C=Credit } & \text { I=Income Statement } \
\hline \begin{array}{l}
\text { C=Contra }
\end{array} & \begin{array}{l}
\text { SE=Stockholders' } \
\text { Equity }
\end{array} & & & \begin{array}{l}
\text { SE=Statement of } \
\text { Stockholders` Equity }
\end{array} \
\hline \begin{array}{l}
\text { N=Not } \
\text { Applicable }
\end{array} & & && \begin{array}{l}
\text { N=None of the } \
\text { above }
\end{array} \
\hline
\end{array}$

Accepted Answer

The answer of For each of the following accounts you...

Question 13

On December 31,2010,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 31,2010?

Accepted Answer

The adjusting entry on December 31, 2010, would be to debit Rent Receivable (or Accounts Receivable) and credit Rent Revenue (or Rental Income) to recognize the revenue that has been earned but not yet received. The journal entry would be as follows:
Adjusting Entry on December 31, 2010:
Debit: Rent Receivable (or Accounts Receivable) $2,000
Credit: Rent Revenue (or Rental Income) $2,000
- Rent Receivable (or Accounts Receivable) is an asset account that increases on the debit side, reflecting the amount owed by the tenants.
- Rent Revenue (or Rental Income) is a revenue account that increases on the credit side, reflecting the earned income from the rent that is due.
This adjusting entry ensures that the revenue is recognized in the period it is earned, in accordance with the accrual basis of accounting, even though the cash has not yet been received.

Question 14

Bridge Company keeps a small inventory of supplies used for cleaning and maintenance purposes.On January 1,2011,the inventory of supplies on hand was $2,000.During the year,supplies purchased were debited to the supplies inventory account in the amount of $6,500.On December 31,2011,the inventory count of supplies in the storeroom was $1,750.Give the adjusting entry required at December 31,2011,assuming that no adjusting entries were made during the year.

Accepted Answer

The answer of Bridge Company keeps a small inventory of...

Question 15

On December 31,2010,Madison Company prepared an income statement and a balance sheet.In making the adjusting entries at year-end,Madison failed to record the adjusting entry for wages earned by employees,but not yet paid,amounting to $5,000 for the last four days of the year.The income statement reported net income of $52,000.The balance sheet reported total assets of $254,000,total liabilities of $170,000 and stockholders' equity of $84,000.
Complete the following tabulation to show the correct amounts for the financial statements (ignore income taxes). $$\begin{array} { | l | l | l | l | l | } 
\hline \text { Item } & \text { Net Income } & \text { Assets } & \text { Liabilities } & \begin{array} { l } 
\text { Stockholders' } \
\text { Equity }
\end{array} \
\hline \text { Balances reported } & \$ 52,000 & \$ 254,000 & \$ 170,000 & \$ 84,000 \
\hline \text { Correction for wages } & & & & \
\hline \text { Corrected balances } & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of On December 31,2010,Madison Company prepared an income...

Question 16

A list of the accounts of Medford Corporation is given below,followed by some selected transactions.Indicate the accounts that should be debited and credited for each transaction closing entry by placing the appropriate account codes in the debit and credit columns provided. $\begin{array}{|c|l|c|l|}
\hline \text { Code } & {\text { Account }} & \text { Cocount } \
\hline \text { A. } & \text { Cash } & \text { I. } & \text { Contributed capital } \
\hline \text { B. } & \text { Prepaid insurance } & \text { J. } & \text { Retained earnings } \
\hline \text { C. } & \text { Accounts receivable } & \text { K. } & \text { Rent revenues } \
\hline \text { D. } & \text { Service trucks } & \text { L. } & \text { Service revenues } \
\hline \text { E. } & \text { Accumulated depreciation } & \text { M. } & \text { Expenses } \
\hline \text { F. } & \text { Accounts payable } & \text { N. } & \text { Income tax payable } \
\hline \text { G. } & \text { Notes payable } & \text { O. } & \text { Income summary } \
\hline \text { H. } & \text { Unearned service revenue } & \text { P. } & \text { Rent payable } \
\hline
\end{array}$

Accepted Answer

The answer of A list of the accounts of Medford...

Question 17

What is the purpose of adjusting entries? Give two examples of accruals and deferrals.

Accepted Answer

The answer of What is the purpose of adjusting entries?...

Question 18

On January 1,2011 the balance in the prepaid insurance account was $2,500.On December 31,2011,after the 2011 adjusting entries were made,the balance of the prepaid insurance account was $1,200.During 2011,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 31,2011.

Accepted Answer

Here's the information we have:
1. Prepaid insurance balance on January 1, 2011: $2,500
2. Prepaid insurance balance on December 31, 2011: $1,200
3. Cash payments for insurance premiums during 2011: $5,000
The total amount available for insurance coverage during the year is the sum of the initial prepaid insurance balance and the cash payments made during the year:
Total available for insurance = Initial prepaid insurance + Cash payments
Total available for insurance = $2,500 + $5,000
Total available for insurance = $7,500
At the end of the year, the remaining balance in the prepaid insurance account is $1,200. This amount represents the insurance that has been paid for but not yet expired as of December 31, 2011, and will be used in the following year(s).
To find the insurance expense for the year, we subtract the remaining prepaid insurance balance from the total available for insurance:
Insurance expense for the year = Total available for insurance - Remaining prepaid insurance
Insurance expense for the year = $7,500 - $1,200
Insurance expense for the year = $6,300
The adjusting entry to record the insurance expense for the year and to adjust the prepaid insurance balance would be:
Date: December 31, 2011
Account Debit Credit
Insurance Expense $6,300
   Prepaid Insurance $6,300
 The Insurance Expense account is debited for $6,300 to recognize the insurance cost incurred during the year. The Prepaid Insurance account is credited for the same amount to reduce its balance to the correct amount of $1,200, which represents the prepaid insurance that will be expensed in the future.

Question 19

What are the purposes of closing entries? Describe permanent and temporary accounts.

Accepted Answer

The answer of What are the purposes of closing entries?...

Question 20

On November 1,2011,Bug Busters collected $6,000 in advance for three months of service to be provided beginning on that date.Bug credited unearned rent revenue for $6,000.Prepare the adjusting entry required on December 31,2011 (assuming that no adjusting entries have been made during the year).

Accepted Answer

The answer of On November 1,2011,Bug Busters collected $6,000 in...

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