Question 1

At December 31, 2016, the following adjusting entries were recorded in the accounts of ABD Company.

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Question 2

Air Cargo Company recorded the following adjusting entries at the end of the accounting year, December 31, 2016:
Wages expense
2,000
Wages payable
2,000
Interest receivable
1,000
Interest revenue
1,000
Before these adjusting entries were recorded, a partial unadjusted trial balance reflected the following:
Account
Balance
Debits
Credits
Service revenue
80,000
Operating expenses
53,000
Wage expense
28,000
Wages payable
-0-
Interest receivable
8,000
Interest revenue
9,000
Required:
Prepare the closing entries for Air Cargo Company at December 31, 2016.

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Question 3

On September 1, 2016, Fast Track, Inc. was started with $30,000 invested by the owners as contributed capital. On September 30, 2016, the accounting records contained the following amounts:  Required:
Prepare a balance sheet for Fast Track, Inc. as of September 30, 2016.

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Question 4

Johnson Corporation is completing the accounting information processing cycle at the end of the fiscal year, June 30, 2016. Johnson has provided the following trial balances as of June 30, 2016:  Required: 
A.Reconstruct the adjusting entries and prepare 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.

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

Question 5

The comparative balance sheets of Titan Company for the years ended December 31, 2016 and 2017, reported the following selected amounts:  The 2017 income statement reported the following:  Required: 
A.Calculate the total amount of office supplies purchased during 2017.
B.Calculate the total amount of rent collected during 2017.
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?

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Question 6

On July 1, 2016, Bass Company paid a two-year insurance premium. On that date the following journal entry was made:
  
A.How much of the premium should be reported as expense on the 2016 income statement?
B.What is the amount of prepaid insurance that should be reported on the balance sheet at December 31, 2016?
C.Prepare the adjusting entry that should be made on December 31, 2016, assuming no adjusting entries have been made during the year.

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Question 7

On January 1, 2016, the balance in the prepaid insurance account was $2,500. On December 31, 2016, after the 2016 adjusting entries were made, the balance of the prepaid insurance account was $1,200. During 2016, 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, 2016.

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Question 8

On December 31, 2016, 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, 2016?

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Question 9

The adjusted trial balance of Tahoe Company at the end of the accounting year, December 31, 2016, showed the following:
Account Titles
Adjusted Trial Balance
Debits
Credits
Cash
$20,000
Machinery
90,000
Accumulated depreciation
$16,000
Accounts payable
7,000
Capital stock
20,000
Retained earnings
59,000
Service revenue
40,000
Interest expense
4,000
Operating expenses
17,000
Depreciation expense
11,000
Total
$142,000
$142,000
Required:
A.Prepare all the required closing entries for Tahoe Company at December 31, 2016.
B.Calculate the 2016 ending balance in retained earnings.

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

Question 10

Modern Mother Magazine (MMM) has received cash subscriptions on April 1, 2016 in the amount of $3,600,000 for the next three years. The year-end for MMM is December 31, 2016. Magazine delivery occurs monthly and started on April 1, 2016. These were the only subscription sales for the year.
Required:
Answer the following questions for the year ended December 31, 2016.
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, 2016?

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Question 11

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.

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Question 12

On September 1, 2016, Fast Track, Inc. was started with $30,000 invested by the owners as contributed capital. On September 30, 2016, the accounting records contained the following amounts:  Required:
Prepare a statement of stockholders' equity for September, the first month of operation. Ignore income taxes.

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Question 13

On September 1, 2016, Fast Track, Inc. was started with $30,000 invested by the owners as contributed capital. On September 30, 2016, 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.

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The answer of On September 1, 2016, Fast Track, Inc....

Question 14

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.
Revenue _____
Expenses _____
Net income _____
Assets _____
Liabilities _____
Stockholders' equity _____
Error 2: A company failed to record depreciation expense at year-end.
Revenue _____
Expenses _____
Net income _____
Assets _____
Liabilities _____
Stockholders' equity _____
Error 3: A company did not adjust the unearned revenue account for revenue earned during the year.
Revenue _____
Expenses _____
Net income _____
Assets _____
Liabilities _____
Stockholders' equity _____

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Question 15

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

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Question 16

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.

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Question 17

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, - 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.

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

Question 18

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.
Revenue _____
Expenses _____
Net income _____
Assets _____
Liabilities _____
Stockholders' equity _____
Error 2: A company failed to accrue revenue earned at year-end.
Revenue _____
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.
Revenue _____
Expenses _____
Net income _____
Assets _____
Liabilities _____
Stockholders' equity _____

Accepted Answer

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

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

At December 31, 2016, the following adjusting entries were recorded in the accounts of ABD Company.

On September 1, 2016, Fast Track, Inc. was started with $30,000 invested by the owners as contributed capital. On September 30, 2016, the accounting records contained the following amounts: Required: Prepare a balance sheet for Fast Track, Inc. as of September 30, 2016.

On December 31, 2016, 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, 2016?

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

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.