Exam 3: Adjusting the Accounts

Employees at Tengo Corporation are paid $15,000 cash every Friday for working Monday through Friday. The calendar year accounting period ends on Wednesday, December 31. How much salaries and wages expense should be recorded two days later on January 2?

At March 1, 2018, Minutemen Corp. had supplies on hand of $500. During the month, Minutemen purchased supplies of $1,200 and used supplies of $1,500. The March 31 adjusting journal entry should include a

Live Wire Hot Rod Shop follows the revenue recognition principle. Live Wire services a car on July 31. The customer picks up the vehicle on August 1 and mails the payment to Live Wire on August 5. Live Wire receives the check in the mail on August 6. When should Live Wire show that the revenue was recognized?

The time period assumption states that

Sonic Youth Corporation purchased a one-year insurance policy in January 2018 for $49,500. The insurance policy is in effect from March 2018 through February 2019. If the company neglects to make the proper year-end adjustment for the expired insurance

Revenue received before services are performed and expenses paid before being used or consumed are both initially recorded as liabilities.

State whether each situation is a prepaid expense (PE), unearned revenue (UR), accrued revenue (AR) or an accrued expense (AE). 1. Unrecorded interest on savings bonds is $245. 2. Property taxes that have been incurred but that have not yet been paid or recorded amount to $300. 3. Legal fees of $1,000 were collected in advance. By year end 60 percent were still unearned. 4. Prepaid insurance had a $500 balance prior to adjustment. By year end, 40 percent was still unexpired.

On July 1, 2018, Jeffrey Underwriters Associates received $8,000 from a client for a 2-year insurance policy. Instructions Prepare the necessary journal entries for Jeffrey Underwriters Associates on July 1 and December 31.

Adjustments would not be necessary if financial statements were prepared to reflect net income from

An adjusted trial balance should be prepared before the adjusting entries are made.

Expenses paid and recorded as assets before they are used are called

Alternative adjusting entries do not apply to

Which of the following time periods would not be referred to as an interim period?

An asset-expense relationship exists with

If a business pays rent in advance and debits a Prepaid Rent account, the company receiving the rent payment will credit

The ______________ principle gives accountants guidance as to when revenue is to be recorded.

Drive-by Truckers prepares monthly financial statements. On July 1, the Supplies account had a balance of $3,000. During July, additional supplies were purchased for $4,800 and that amount was debited to Supplies Expense. On July 31, a physical count of supplies revealed that there was $2,000 on hand. Prepare the adjusting journal entry that Drive-by Truckers should make on July 31. 2. Alesandro Rental Agency prepares monthly financial statements. On September 1, a check for $9,000 was received from a tenant for six months' rent. The full amount was credited to Rent Revenue. Prepare the adjusting entry the company should make on September 30.

An expense is recorded under the cash basis only when

An adjusted trial balance

Accounts often need to be adjusted because