Exam 3: Adjusting the Accounts

Action Real Estate received a check for $18,000 on July 1 which represents a 6 month advance payment of rent on a building it rents to a client. Unearned Rent was credited for the full $18,000. Financial statements will be prepared on July 31. Action Real Estate should make the following adjusting entry on July 31:

Financial statements are prepared directly from the

At March 1, 2010, Jupiter Corp. had supplies on hand of $500. During the month, Jupiter purchased supplies of $1,200 and used supplies of $1,500. The March 31 adjusting journal entry should include a

Accrued expenses are

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

Management usually desires ________ financial statements and the IRS requires all businesses to file _________ tax returns.

In a service company, revenue is earned when the service is ______________.

On January 1, 2009, P.T. Scope Company purchased a computer system for $3,240. The company expects to use the system for 3 years. The asset has no salvage value. The book value of the system at December 31, 2010 is

Presented below is the Trial Balance and Adjusted Trial Balance for Clark 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.

At December 31, 2010, before any year-end adjustments, Cable Car Company's Insurance Expense account had a balance of $1,450 and its Prepaid Insurance account had a balance of $3,800. It was determined that $3,000 of the Prepaid Insurance had expired. The adjusted balance for Insurance Expense for the year would be

Wild Animal Presentations initiated operations on July 1, 2010. To manage the company officers and managers have requested monthly financial statements starting July 31, 2010. The adjusted trial balance amounts at July 31 are shown below. (a) Determine the net income for the month of July. (b) Determine the total assets and total liabilities at July 31, 2010 for Wild Animal Presentations. (c) Determine the amount that appears for Brad Stone, Capital at July 31, 2010.

The ______________ assumption divides the economic life of a business into artificial time periods.

Under accrual-basis accounting

Monthly and quarterly time periods are called

Prepare the necessary adjusting entry for each of the following: 1. Services provided but unrecorded totaled $900. 2. Accrued salaries at year-end are $1,000. 3. Depreciation for the year is $600.

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 prepare an adjusting entry at the end of a period to record an accrued revenue would cause

Alternative adjusting entries do not apply to

On December 31, 2010, Speedy 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 $40,000. The balance sheet showed total assets, $120,000; total liabilities, $45,000; and owner's equity, $75,000. The data for the three adjusting entries were: (1) Depreciation of $9,000 was not recorded on equipment. (2) Wages amounting to $8,000 for the last two days in December were not paid and not recorded. The next payroll will be in January. (3) Rent of $14,000 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):

Adjusting entries are recorded in the general journal but are not posted to the accounts in the general ledger.