Exam 3: Adjusting Accounts for Financial Statements

Flagg records adjusting entries at its December 31 year-end.At December 31,employees had earned $12,000 of unpaid and unrecorded salaries.The next payday is January 3,at which time $30,000 will be paid.Prepare the journal entry on January 3 to record payment assuming the adjusting and reversing entries were made on December 31 and January 1.

The following information is available for the Noir Detective Agency.After closing entries are posted,what will be the balance in the Retained earnings account?

Chase Company has 10 employees,who earn a total of $1,800 in salaries each working day.They are paid on Monday for the five-day workweek ending on the previous Friday.Assume that year ended on December 31,which is a Wednesday,and all employees will be paid salaries for five full days on the following Monday.The adjusting entry needed on December 31 is:

Reversing entries:

The cash basis of accounting recognizes revenues when cash payments from customers are received.

Accrued expenses at the end of one accounting period are expected to result in cash payments in a future period.

If a company plans to continue business into the future,closing entries are not required.

Which of the following statements about a company's operating cycle is not true:

An ________ is a listing of all of the accounts in the ledger with their account balances before adjustments are made.

________ is the process of allocating the cost of plant assets to the income statement over their expected useful lives.

________ expenses are those costs that are incurred in a period but are both unpaid and unrecorded.

On April 1,Otisco,Inc.paid Garcia Publishing Company $1,548 for 36-month subscriptions to several different magazines.Otisco debited the prepayment to a Prepaid Subscriptions account,and the subscriptions started immediately.What amount should appear in the Prepaid Subscription account for Otisco,Inc.after adjustments on December 31 of the first year assuming the company is using a calendar-year reporting period and no previous adjustment has been made?

On December 31,Jacoby Company's Prepaid Rent account had a balance before adjustment of $6,000.Three months' rent was paid in advance on December 1,the first day of the lease term.The adjusting entry needed on December 31 is:

Profit margin is calculated by dividing net sales by net income.

Use the information in the adjusted trial balance presented below to calculate the current ratio for Wicked Wicker Company:

The accrual basis of accounting reflects the principle that revenue is recorded when it is earned,not when cash is received.

Adjustments are necessary to bring an asset or liability account to its proper amount and also update a related expense or revenue account.

If Bojana Tax Services' office supplies account balance on March 1 was $1,400,the company purchased $675 of supplies during the month,and a physical count of supplies on hand at the end of March indicated $1,250 unused,what is the amount of the adjusting entry for office supplies on March 31?

In its first year of operations,Grace Company reports the following: Earned revenues of $60,000 ($52,000 cash received from customers); Incurred expenses of $35,000 ($31,000 cash paid toward them); Prepaid $8,000 cash for costs that will not be expensed until next year.Net income under the accrual basis of accounting is:

A physical count of supplies on hand at the end of May for Masters,Inc.indicated $1,250 of supplies on hand.The general ledger balance before any adjustment is $2,100.What is the adjusting entry for office supplies that should be recorded on May 31?