Exam 3: Adjusting the Accounts

When the original entry for unearned revenue is credited to Revenue, the adjusting entry will debit Revenue and credit Unearned Revenue for the unearned amount at the date of the Financial Statements.

Sackville Harness Shop received $2,000 cash for harness services to be provided in the future. The full amount was credited to the liability account Unearned Harness Fees. If the Harness services have been provided at the end of the accounting period and no adjusting entry is made, this would cause

The total weekly payroll for Fly-By Airlines is $700,000 ($100,000 per day). The company operates seven days a week and pays employees each Wednesday for the previous Monday-Sunday work week. Salaries were last paid on Wednesday, January 28 for the pay period ended January 25. The next pay date is Wednesday February 4. The company's year end is January 31. Instructions Prepare the journal entries to record the following: a. The payment of salaries on January 28 b. The adjusting entry to accrue salaries at year end c. The payment of salaries on February 4

Management usually desires _________ financial statements and the Canada Revenue Agency requires all businesses to file __________ tax returns.

Depreciation of a long-lived asset is the process of

Accrued expenses are

The Shockers, a semi-professional baseball team, prepare financial statements on a monthly basis. Its season begins in April, but in February the team engaged in the following transactions: 1. Paid $200,000 to the city of Toronto as advance rent for use of a stadium for the six month period April 1 through September 30. 2. Collected $600,000 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 Shockers played four home games and three road games. Instructions Prepare the adjusting entries required at April 30 for the transactions above.

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

Which of the following would be prepared immediately after all adjusting entries for a period have been made?

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

The adjusted trial balance of Amin 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.

The straight-line method of depreciation will allocate a portion of the cost of the asset to each year of useful life of the asset.

The revenue recognition criteria states that revenue of a business is recognized

In general, the shorter the time period, the difficulty of making the proper adjustments to accounts

Jane Richards, CGA, has performed $2,000 of accounting services for a client but has not billed the client as of the end of the accounting period. What adjusting entry must Jane make?

Callison Company has an accounting fiscal year which ends on June 30. The company also has a policy of paying the weekly payroll on Friday. Payroll records indicate the following salary costs were incurred. The company also purchased a used car at the beginning of the month (June 1) for $6,000 cash. The car has a useful life of 5 years. Instructions a. Prepare any necessary adjusting journal entries that should be made at year end on June 30. b. Prepare the journal entry to record the payment of the weekly payroll on July 2.

For each situation, state the correct revenue or expense amount to record each year following the revenue/ expenses recognition criteria. 1. Revenue earned in 2014 will be collected in 2015 in the amount of $22,500. 2. Received bills in 2015 for $16,300 for expenses incurred in 2014. 3. Consulting services performed in 2014 for $35,000. However client only paid $2,000 in 2014 and will pay the remainder in 2015. 4. Purchased supplies for $13,000 for a job to be started on in 2015. 5. Purchased supplies for $2,300 for a job that was completed in 2014. 6. Advance payment of $88,000 received in 2014 for a contract to be completed equally in 2015 and 2016. 7. Purchased supplies for $40,000 in 2015 for a new contract that will begin in 2016.

From an accounting standpoint, the acquisition of production equipment can be thought of as a long-term

Tantramar Construction has an October 31 year end. On October 20 Tantramar received a payment from Cantech Industries in the amount of $25,000 as an advance on the construction for the new head office of Cantech. Construction was to have started October 25 but due to an early snowfall, construction did not start until November 7. Construction is scheduled to be completed December 31. Following the revenue recognition criteria, the revenue which Tantramar should record in its October 31 Financial Statements is

To decrease an unearned revenue account, a credit entry to that account must be made.