Exam 3: Adjusting the Accounts

New Slang Pest Control has the following balances in selected accounts on December 31 2016. Accounts Receivable \ 0 Accumulated Depreciation - Equipment 0 Equipment 6,650 Interest Payable 0 Notes Payable 20,000 Prepaid Insurance 2,220 Salaries and Wages Payable 0 Supplies 2,940 Unearned Service Revenue 30,000 All of the accounts have normal balances. The information below has been gathered at December 31 2016. 1. Depreciation on the equipment for 2016 is $1300. 2. New Slang Pest Control borrowed $20000 by signing a 10% one-year note on July 1 2016. 3. New Slang Pest Control paid $2220 for 12 months of insurance coverage on October 1 2016. 4. New Slang Pest Control pays its employees total salaries of $11000 every Monday for the preceding 5-day week (Monday-Friday). On Monday December 27 2016 employees were paid for the week ending December 24 2016. All employees worked the five days ending December 31 2016. 5. New Slang Pest Control performed disinfecting services for a client in December 2016. The client will be billed $3200. 6. On December 1 2016 New Slang Pest Control collected $30000 for disinfecting processes to be performed from December 1 2016 through May 31 2016. 7. A count of supplies on December 31 2016 indicates that supplies of $850 are on hand. Instructions Prepare in journal form with explanations the adjusting entries for the seven items listed for New Slang Pest Control.

If a resource has been consumed but a bill has not been received at the end of the accounting period then

The adjusted trial balance of Hanson Hawk Company at September 30 2016 includes the following accounts: Owner's Capital $27700; Owner's Drawings $9750; Service Revenue $46800; Insurance Expense $1950; Salaries Expense $18000; Rent Expense $3000; Supplies Expense $650; and Depreciation Expense $1100. Prepare an owner's equity statement for the year.

The Accumulated Depreciation account is a contra asset account that is reported on the balance sheet.

Ultramega Company collected $19600 in May of 2016 for 5 months of service which would take place from October of 2016 through February of 2017. The revenue reported from this transaction during 2016 would be

An adjusted trial balance

On July 1 Outdoor Sports Store paid $15000 to Midtown Realty for 4 months rent beginning July 1. Prepaid Rent was debited for the full amount. If financial statements are prepared on July 31 the adjusting entry to be made by Outdoor Sports Store is

Depreciation is the process of

The balance sheets of Professional Painters include the following: 12/31/16 12/31/15 Interest Receivable \ 0 \ 4,800 Supplies 3,300 5,000 Salaries and Wages Payable 5,900 7,600 Unearned Service Revenue 2,500 -0- $\text { The income statement for } 2016 \text { shows the following: }$ Interest Revenue \ 19,400 Service Revenue 76,700 Supplies Expense 6,700 Salaries and Wages Expense 39,000 Instructions Calculate the following for 2016: 1. Cash received for interest. 2. Cash paid for supplies. 3. Cash paid for salaries and wages. 4. Cash received for revenue.

Tomi See CPA has billed her clients for services performed. She subsequently receives payments from her clients. What entry will Tomi make upon receipt of the payments?

An accounting period that is one year in length is referred to as a ______________ year.

The balance in the supplies account on June 1 was $5000 supplies purchased during June were $3000 and the supplies on hand at June 30 were $3500. The amount to be used for the appropriate adjusting entry is

On January 1 2015 Miraz Company purchased furniture for $7800. The company expects to use the furniture for 3 years. The asset has no salvage value. The book value of the furniture at December 31 2016 is

Accounts often need to be adjusted because

Under accrual-basis accounting

Before month-end adjustments are made the February 28 trial balance of Donner's Pass Hotel contains revenue of $8100 and expenses of $4700. Adjustments are necessary for the following items: $\bullet$ Depreciation for February is $1500. $\bullet$ Revenue recognized but not yet billed is $1700. $\bullet$ Accrued interest expense is $500. $\bullet$ Revenue collected in advance that is now recognized is $2800. $\bullet$ Portion of prepaid insurance expired during February is $300. Instructions Calculate the correct net income for Donner's Pass Hotel's Income Statement for February.

A contra asset account is subtracted from a related account in the balance sheet.

Blue Chip Investments purchased an 12-month insurance policy on May 31 2016 for $3480. The December 31 2016 balance sheet would report Prepaid Insurance of

If prepaid costs are initially recorded as an asset no adjusting entries will be required in the future.

If accounting information has relevance it is useful in making predictions about