Question 1

A post-closing trial balance

Accepted Answer

A post-closing trial balance includes only permanent accounts, as temporary accounts (such as revenue and expense accounts) have been closed out at the end of the accounting period.

Question 2

Journal entries
Jonathan Green owns Gopher Greenhouses, a gardening centre (as a sole proprietorship). His first year of operations included the following selected events and transactions:
January:
$\quad$$\quad$1. He invested $ 300,000 in his business.
$\quad$$\quad$2. He bought a greenhouse for $ 100,000 cash.
May:
$\quad$$\quad$3. He hired a greenhouse supervisor at an annual salary of $ 34,000.
June:
$\quad$$\quad$4. He ordered and paid for a shipment of flowers costing $ 80,000.
$\quad$$\quad$5. He sold flowers for $ 40,000. Half of these sales were made on account.
August:
$\quad$$\quad$6. He received a deposit of $ 5,000 from a customer to put merchandise "on hold".
$\quad$$\quad$7. He paid current month's salaries of $ 3,000.
Instructions
Prepare all required journal entries.

Accepted Answer

The answer of Journal entries
Jonathan Green owns Gopher Greenhouses, a...

Question 3

The accounting cycle
Summarize the steps in the accounting cycle.

Accepted Answer

The answer of The accounting cycle
Summarize the steps in the...

Question 4

Definitions
Provide clear, concise answers for the following:
1. What is the accrual basis of accounting?
2. What is an accrued expense?
3. What is accrued revenue?
4. What is a prepaid expense?
5. What is unearned revenue?
*6. 	State the rule that indicates which adjusting entries for prepaid and unearned items should be reversed.

Accepted Answer

The answer of Definitions
Provide clear, concise answers for the following:
1....

Question 5

Frog Corporation had revenues of $ 300,000, expenses of $ 200,000, and dividends of $ 45,000. When Income Summary is closed to Retained Earnings, the amount of the debit or credit to Retained Earnings is a

Accepted Answer

To determine the amount of the debit or credit to Retained Earnings, we need to calculate the net income or loss first:
Net Income = Revenues - Expenses
Net Income = $300,000 - $200,000
Net Income = $100,000

Since dividends reduce Retained Earnings, we need to subtract the dividends from the net income:
Retained Earnings = Net Income - Dividends
Retained Earnings = $100,000 - $45,000
Retained Earnings = $55,000

Since Income Summary has a credit balance of $100,000 (revenues of $300,000 minus expenses of $200,000), we need to debit Income Summary by $100,000 and credit Retained Earnings by the same amount to close the temporary account.

Therefore, the answer is C, a credit of $55,000 to Retained Earnings.

Question 6

Recordable events
Before transactions are entered into a corporation's accounting system, the underlying event must be analyzed, to determine how (and if) it should be recorded. The situations below relate to Maxwell Corporation:
Instructions
Indicate whether the items below are recordable events.
1. A new mortgage contract for its new factory building is signed.
2. The first mortgage payment is made.
3. Wages for the current month are paid.
4. A new secretary is hired.
5. Property taxes are paid.
6. HST collections for the current month are forwarded to the CRA.

Accepted Answer

The answer of Recordable events
Before transactions are entered into a...

Question 7

Adjusting entries
The information shown below relates to Flower Corporation. At December 31, 2020, Flower's general ledger shows the following balances:
 $$\begin{array} { l l l l } 
\text { Prepaid lease ............................ } & \mathbf { \$ 7 , 0 0 0 } & \text { Debit } \
\text { Prepaid insurance ...................... } & \mathbf { \$ 1 2 0 0 } & \text { Debit } \
\text { Unearmed revenue } . . \ldots \ldots \ldots \ldots \ldots \ldots . \ldots \ldots & \mathbf { \$ 8 4 , 0 0 0 } & \text { Credit }
\end{array}$$ In addition, the following information is available:
1. The entire amount shown as prepaid lease has expired.
2. One-third of the amount shown as prepaid insurance has expired.
3. Half of the amount shown as unearned revenue has now been earned.
Instructions
Prepare all adjusting entries that are required at December 31, 2020.

Accepted Answer

The answer of Adjusting entries
The information shown below relates to...

Question 8

Adjusting entries
Part I - Maison Corp. has reported pre-tax income of $ 250,000 for calendar 2020, before considering the five items below. Prepare the adjusting entries needed at December 31, 2020 in order to correctly state the 2020 pre-tax income. If no entry is needed, write NONE.
1. Interest on a $ 42,000, 7%, six-year note payable was last paid on September 1, 2019.
2. On May 31, 2020, Maison entered into a contract to provide services to a customer for 18 months beginning June 1. The customer paid the $ 18,000 fee in full on June 1 and Maison credited it to Service Revenue.
3. On August 1, 2020, Maison paid a year's rent in advance on a warehouse, and debited the $ 48,000 payment to Prepaid Rent.
4. Depreciation on office equipment for 2020 is $ 17,000.
5. On December 18, 2020, Maison paid the local newspaper $ 1,000 for an advertisement to be run in January of 2021, debiting it to Prepaid Advertising.
Part II - Show the effect of each adjusting entry in Part I on previously reported pre-tax income, and indicate the correct amount of pre-tax income.

Accepted Answer

The answer of Adjusting entries
Part I - Maison Corp. has...

Question 9

Calculation of expense
Sales salaries paid during 2020 were $ 90,000. Advances to salesmen were $ 1,300 on January 1, 2020, and $ 800 on December 31, 2020. Sales salaries payable were $ 1,300 on January 1, 2020, and $ 1,400 on December 31, 2020.
Instructions
Calculate the Sales Salaries Expense for calendar 2020.

Accepted Answer

The answer of Calculation of expense
Sales salaries paid during 2020...

Question 10

Adjusting entries
Present, in journal form, the adjustments that would be made on July 31, 2020, the end of the fiscal year, for each of the following:
1. The supplies inventory on August 1, 2019, was $ 8,350. Supplies costing $ 16,650 were purchased during the fiscal year and debited to Supplies Inventory. A count on July 31, 2020, indicated supplies on hand of $ 6,810.
2. On April 30, a ten-month, 4% note for $ 40,000 was received from a customer.
3. On March 1, $ 8,400 was collected as rent for one year and a nominal (temporary) account was credited.

Accepted Answer

The answer of Adjusting entries
Present, in journal form, the adjustments...

Question 11

Definitions
Define the following terms:
1. Event
2. Work sheet
3. Permanent accounts
4. Temporary accounts
5. Income summary
6. General ledger

Accepted Answer

The answer of Definitions
Define the following terms:
1. Event
2. Work sheet
3....

Question 12

Adjusting entries
Reed Co. wishes to record receipts and payments in such a manner that adjustments at the end of the period will NOT require reversing entries at the beginning of the next period.
Instructions
Record the following transactions in the desired manner; as well, record the adjusting entry on December 31, 2020. (Two entries for each part.)
1. An insurance policy for two years was purchased on April 1, 2020, for $ 18,000.
2. Rent of $ 12,000 for six months for a portion of the building was received on November 1, 2020.

Accepted Answer

The answer of Adjusting entries
Reed Co. wishes to record receipts...

Question 13

Adjusting and closing entries
1. Using the adjusted trial balance of Charles Corporation from Pr. 3-99, journalize the adjustments that were made.
2. Using the adjusted trial balance of Charles Corporation from Pr. 3-99, journalize the closing entries that are required.

Accepted Answer

The answer of Adjusting and closing entries
1. Using the adjusted...

Question 14

Calculation of revenue
The records for Oriole Corp. showed the following for 2020:
 $\begin{array}{cccc}
&\underline{\text {Jan 1  }} &\underline{  \text {Dec 31}  }   \
 \text { Unearned revenue............................... } &\$3,000&\$3,400\
 \text {Accrued revenue................................... } &1,400&1,100\
 \text {Cash collected during the year from revenue.......  } &\$85,000&\
\end{array}$
 Instructions
Show the calculation of the amount of revenue that should be reported on the 2020 statement of comprehensive income.

Accepted Answer

The answer of Calculation of revenue
The records for Oriole Corp....

Question 15

Adjusting and closing entries
The following trial balance was taken from the books of Kaslo Corporation at December 31, 2020:
  At year end, the following items have not yet been recorded.
1. Insurance expired during the year, $ 3,000.
2. Estimated bad debts, 1 percent of gross sales.
3. Depreciation on furniture and equipment, 10% per year.
4. Interest at 9% is receivable on the note for one full year.
5. Rent paid in advance at December 31, $ 6,800 (originally debited to expense).
6. Accrued salaries at December 31, $ 6,200.
Instructions
a) Prepare the necessary adjusting entries.
b) Prepare the necessary closing entries.

Accepted Answer

The answer of Adjusting and closing entries
The following trial balance...

Question 16

Which of the following statements about the trial balance is correct?

Accepted Answer

The trial balance is a bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account column totals that are equal. A fundamental aspect of the trial balance is that the total of debit balances should equal the total of credit balances, ensuring that all entries in the accounting system are mathematically correct. However, this does not guarantee the absence of errors, as some types of errors may not affect the balance. The post-closing trial balance includes only permanent accounts, not temporary accounts. Financial statements are prepared from the adjusted trial balance, not directly from the post-closing trial balance.

Question 17

If the inventory account at the end of the year is understated, the effect will be to

Accepted Answer

When the inventory account is understated, it means that the cost of goods sold is overstated. This is because the calculation of cost of goods sold involves subtracting the ending inventory from the cost of goods available for sale. If the ending inventory is understated, the cost of goods sold will be overstated. As a result, the gross profit on sales will be understated since it is calculated by subtracting the cost of goods sold from the net sales.

Question 18

Type of ownership structure
Explain whether the financial statement excerpt below is from the financial statements of a corporation, a sole proprietorship, or a partnership:
 $\begin{array}{llcc}
  \text { Abhrams, Capital............................ } & \$20,000 \
 \text { Johnston, Capital............................ } &25,000\
 \text {Zinck, Capital..................................  } &\underline{20,000}\
 \text { Total ..............................................} &\$65,000\

\end{array}$

Accepted Answer

The answer of Type of ownership structure
Explain whether the financial...

Question 19

Calculation of expense
The records for Jay Inc. showed the following for 2020:
 $\begin{array}{cccc}
&\underline{\text {Jan 1  }} &\underline{  \text {Dec 31}  }   \
 \text { Accrued expenses............................... } &\$2,000&\$3,600\
 \text { Prepaid expenses................................... } &900&800\
 \text {Cash paid during the year for expenses......  } &&\$55,000\
\end{array}$
 Instructions
Calculate the total amount of expenses that should be reported on the 2020 statement of comprehensive income.

Accepted Answer

The answer of Calculation of expense
The records for Jay Inc....

Question 20

Preparing financial statements The adjusted trial balance of Ryan Financial Planners appears below. Instructions Using the information from the adjusted trial balance, you are to prepare for the month ended December 31: a) an income statement. b) a retaired eamings statement. c) a balence sheet. $\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $Ryan Financial Planners $\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $Adjusted Trial Balance $\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $December 31, 2020 \(\begin{array}{c} \begin{array}{lll} \ \text {Cash........................................................................}\ \text {Accounts Receivable................................................}\ \text {Supplies...................................................................}\ \text {Equipment................................................................}\ \text {Accumulated Depreciation-Equipment.....................}\ \text {Accounts Payable.....................................................}\ \text {Unearned Service Revenue.......................................}\ \text {Common Shares........................................................}\ \text {Retained Earnings.....................................................}\ \text {Dividends..................................................................}\ \text {Service Revenue.......................................................}\ \text {Supplies Expense....................................................}\ \text {Depreciation Expense.............................................}\ \text {Rent Expense.........................................................}\ \ \end{array} \begin{array}{r} \underline{\text { Debit } }\ \$2,900 \ 2,200 \ 1,800 \ 16,000\ \ \ \ \ \ 2,000 \ \ 600 \ 2,500 \ \underline{2,900 }\ \underline{\underline{\$ 30,900}} \ \end{array} \begin{array}{r} \underline{\text {Credit}}\ \ \ \ \ \$ 4,000 \ 3,300 \ 5,000 \ 10,000 \ 4,400 \ \ 4,200\ \ \ \underline{\quad \quad}\ \underline{\underline{\$ 30,900}} \end{array} \end{array}\)

Accepted Answer

The answer of Preparing financial statements
The adjusted trial balance of...

Quiz 13: Accounting Information Systems and Adjusting Entries: A Comprehensive Guide

A post-closing trial balance

The accounting cycle Summarize the steps in the accounting cycle.

Frog Corporation had revenues of $ 300,000, expenses of $ 200,000, and dividends of $ 45,000. When Income Summary is closed to Retained Earnings, the amount of the debit or credit to Retained Earnings is a

Definitions Define the following terms: 1. Event 2. Work sheet 3. Permanent accounts 4. Temporary accounts 5. Income summary 6. General ledger

Adjusting and closing entries 1. Using the adjusted trial balance of Charles Corporation from Pr. 3-99, journalize the adjustments that were made. 2. Using the adjusted trial balance of Charles Corporation from Pr. 3-99, journalize the closing entries that are required.

Which of the following statements about the trial balance is correct?

If the inventory account at the end of the year is understated, the effect will be to