Exam 3: Adjusting the Accounts

Mal de Mere Cruises purchased a five-year insurance policy for its ships on April 1 2016 for $50000. Assuming that April 1 is the effective date of the policy the adjusting entry on December 31 2016 is a. Prepaid Insurance 7,500 Insurance Expense. 7,500 b. Insurance Expense 7,500 Prepaid Insurance 7,500 c. Insurance Expense 10,000 Prepaid Insurance 10,000 d. Insurance Expense 2,500 Prepaid Insurance 2,500

Match the statements below with the appropriate terms by entering the appropriate letter code in the spaces provided.

Euqene Cement Corporation reported $35 million for sales when it only had $20 million of actual sales. Which of the following qualities of useful information has Jackson most likely violated?

The cost of a depreciable asset less accumulated depreciation reflects the book value of the asset.

Presented below is the Trial Balance and Adjusted Trial Balance for Morning Jacket Company on December 31. Instructions Prepare in journal form with explanations the adjusting entries that explain the changes in the balances from the trial balance to the adjusted trial balance.

Consistent use of the same accounting principles and methods is necessary for meaningful analysis of trends within a company.

On December 31 2016 Fashion Nugget Company prepared an income statement and balance sheet and failed to take into account three adjusting entries. The incorrect income statement showed net income of $35000. The balance sheet showed total assets $115000; total liabilities $45000; and owner's equity $70000. The data for the three adjusting entries were: (1) Depreciation of $10000 was not recorded on equipment. (2) Wages amounting to $7000 for the last two days in December were not paid and not recorded. The next payroll will be in January. (3) Rent of $12000 was paid for two months in advance on December 1. The entire amount was debited to Rent Expense when paid. Instructions Complete the following tabulation to correct the financial statement amounts shown (indicate deductions with parentheses):

Petite Inc. pays its rent of $57000 annually on January 1. If the February 28 monthly adjusting entry for prepaid rent is omitted which of the following will be true?

Adjusting entries are

Cornhusker Supplies Inc. purchased a 12-month insurance policy on March 1 2016 for $2640. At March 31 2016 the adjusting journal entry to record expiration of this asset will include a

At March 1 Payday Inc. reported a balance in Supplies of $250. During March the company purchased supplies for $800 and consumed supplies of $700. If no adjusting entry is made for supplies

The economic entity assumption states that economic events

Revaluation of land and buildings is permitted under

On January 1 Hall & Oates CPAs received a $17400 cash retainer for accounting services to be rendered ratably over the next 3 months. The full amount was credited to the liability account Unearned Service Revenue. Assuming that the revenue is recognized equally over the 3-month period what adjusting journal entry should be made at January 31?

If a business has received cash in advance of services performed and credits a liability account the adjusting entry needed after the services are performed will be

Failure to adjust a prepaid expense account for the amount expired will cause ______________ to be understated and ________________ to be overstated.

Boneta City College sold season tickets for the 2016 football season for $250000. A total of 8 games will be played during September October and November. Assuming all the games are played the Unearned Ticket Revenue balance that will be reported on the December 31 balance sheet will be

The Monks a minor league baseball team prepare financial statements on a monthly basis. Their season begins in April but in March the team engaged in the following transactions: (a) Paid $240000 to San Diego as advance rent for use of San Diego Stadium for the six month period April 1 through September 30. (b) Collected $480000 cash from sales of season tickets for the team's 20 home games. This amount was credited to Unearned Ticket Revenue. During the month of April the Monks played five home games and four road games. Instructions Prepare the adjusting entries required at April 30 for the transactions above.

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

The adjusted trial balance of the Chula Vista Paving Company includes the following balance sheet accounts that frequently require adjustment. For each account indicate (a) the type of adjusting entry (prepaid expenses unearned revenues accrued revenues or accrued expenses) and (b) the related account in the adjusting entry. () () 1. Supplies 2. Accounts Receivable 3. Prepaid Insurance 4. Accumulated Depreciation Equipment 5. Interest Payable 6. Salaries and Wages Payable 7. Unearned Revenue