Question 1

The worksheet is a useful step in preparing adjusting entries and the unadjusted trial balance.

Accepted Answer

The worksheet provides a clear picture of the adjustments that need to be made in the accounts before the preparation of financial statements. It also helps in recording the adjustments in the trial balance, which is used to prepare the financial statements.

Question 2

The partial worksheet of Ruth Furniture is as follows:

Accumulated

Calculate and enter the amounts for the Adjusted Trial Balance columns.

Accepted Answer

The answer of The partial worksheet of Ruth Furniture is...

Question 3

On March 1,2016,Norton Company paid $60,000 as office rent covering the three-month period ending May 31,2016.Journalize the entry on March 1 by using the alternative treatment of deferred expenses.

Accepted Answer

The answer of On March 1,2016,Norton Company paid $60,000 as...

Question 4

Sierra Event Planning Services records deferred expenses and deferred revenues using alternative treatments.It makes adjusting entries as needed to bring its books to the full accrual basis once a year at the end of the year.On December 15,it collected $4,000 from a customer in advance for a series of events that will start late December and end in March.At the end of the year,it had performed approximately 10% of the services for its customer.The adjusting entry on December 31 will include a debit to Service Revenue for $3,600.

Accepted Answer

Service Revenue = $4,000 × 90% = $3,600

Question 5

Stancil Enterprises prepaid four months of office rent totaling $8,100 on October 1,2017.Assuming Stancil records deferred expenses using the alternative treatment,what would be the adjusting entry recorded on December 31,2017?

Accepted Answer

Assuming that Stancil uses the alternative treatment, it means that the prepaid rent is initially recorded as an asset and then adjusted to an expense account as time passes. Since four months have passed since the rent payment was made on October 1, 2017, two months' worth of rent expense needs to be recognized in the adjusting entry.

To adjust the prepaid rent account, the company should debit Prepaid Rent (an asset account) and credit Rent Expense (an expense account) for the portion of rent that has been used up during the period.

The calculation to determine the amount for the adjusting entry is: 
Prepaid rent ÷ number of months paid for = monthly rent expense 
$8,100 ÷ 4 months = $2,025/month

Therefore, the adjusting entry on December 31, 2017 is:
Debit Prepaid Rent for $4,050 ($2,025 x 2 months)
Credit Rent Expense for $4,050 ($2,025 x 2 months)

Question 6

The following extract was taken from the worksheet of Dutch Company for the year 2016.

From the above information,determine the amount of the Rent Expense adjustment.

Accepted Answer

The answer of The following extract was taken from the...

Question 7

Deferred expenses are also called prepaid expenses.

Accepted Answer

Deferred expenses are expenses that have been paid in advance and will be recognized as expenses in future accounting periods. They are also known as prepaid expenses.

Question 8

To fill in the unadjusted trial balance columns in a worksheet,the account balances before adjustments are copied directly from the ________.

Accepted Answer

The unadjusted trial balance is prepared by simply listing all the accounts and their balances from the general ledger, without making any adjustments. Therefore, the account balances are copied directly from the ledger.

Question 9

An internal document that helps summarize data for the preparation of financial statements is called a ________.

Accepted Answer

A worksheet is an internal document used to summarize data and make adjustments for the preparation of financial statements. Journals and ledgers are used to record transactions, while the chart of accounts is a list of accounts used to classify financial transactions.

Question 10

The following extract was taken from the worksheet of Kelly Bakers for the year 2016.

For the above information,determine the amount of Depreciation Expense for the equipment used in the business.

Accepted Answer

The answer of The following extract was taken from the...

Question 11

The accounts that are used in a worksheet are taken from and listed in the same order as the ________.

Accepted Answer

The chart of accounts is a list of all the accounts used by a company, in a specific order. This order is generally followed when listing the accounts in a worksheet. The balance sheet and journal may provide information on specific accounts, but they do not dictate the order in which accounts are listed. The audit report, on the other hand, is a document prepared by an independent auditor and does not include a list of accounts in any particular order.

Question 12

Deferred revenues are assets because the business has collected the cash before earning the revenue.

Accepted Answer

Deferred revenues, also called unearned revenues, arise when a business collects cash before earning the revenue.

Question 13

On March 1,2016,LeBlanc Company paid $60,000 for office rent covering the three-month period ending May 31,2016.Journalize the adjusting entry on March 31 by using the alternative treatment of deferred expenses.

Accepted Answer

The answer of On March 1,2016,LeBlanc Company paid $60,000 for...

Question 14

Williams Enterprises prepaid six months of office rent totaling $9,000 on October 1,2017.Assuming Williams records deferred expenses using the alternative treatment,what would be the entry on October 1,2017?

Accepted Answer

Under the alternative treatment for deferred expenses, the expense is recorded immediately. Therefore, Rent Expense is debited and Cash is credited for the prepaid amount.

Question 15

On September 1,Capitol Maintenance Company contracted to provide monthly maintenance services for the next seven months at a rate of $2,300 per month.The client paid Capitol $16,100 on September 1.The maintenance services began on that date.Assuming Capitol records deferred revenues using the alternative treatment,what would be the adjusting entry recorded on December 31?

Accepted Answer

The adjusting entry on December 31 would be to debit Service Revenue and credit Unearned Revenue for $6,900. This is because Capitol has earned $6,900 of revenue for the services performed from September 1 to December 31 ($2,300 x 3 months).

Question 16

Wentlent Services Company records deferred expenses as expenses when payment is made in advance and deferred revenues as revenues when the payment is received in advance.At the end of the year,Wentlent Services Company makes the necessary adjustments based on accrual basis accounting.On July 1,it paid rent for an office in the amount of $24,000 for the period July 1 through June 30 of the following year.Provide the year-end adjusting entry for rent prepayment.

Accepted Answer

The answer of Wentlent Services Company records deferred expenses as...

Question 17

Avalon Event Planning Services records deferred expenses and deferred revenues using the alternative treatments.It makes adjusting entries as needed to bring its books to the full accrual basis once a year at the end of the year.On October 1,it paid $3,700 for insurance for a one-year period.At the end of the year,it will make an adjusting entry that debits Insurance Expense for $1,850.

Accepted Answer

Prepaid Expense = $3,700 × 6/12 = $1,850

Question 18

On December 15,Duncan Services Company collected revenue of $3,000 in advance from a new client,and agreed to provide services to the client for the period of December 15 through January 15 of the following year.Assume that the company records deferred revenues using the alternative treatment,and journalize the adjusting entry recorded on December 31.

Accepted Answer

The answer of On December 15,Duncan Services Company collected revenue...

Question 19

On September 1,Peterson Maintenance Company contracted to provide monthly maintenance services for the next six months at a rate of $2,000 per month.The client paid Peterson $12,000 on September 1.Assuming Peterson records deferred revenues using the alternative treatment,what would be the entry on September 1?

Accepted Answer

The answer of On September 1,Peterson Maintenance Company contracted to...

Quiz 3: The Adjusting Process