Exam 3: Adjusting the Accounts

At December 31, 2014, before any year-end adjustments, Fawcett Foundry Company's Insurance Expense account had a balance of $725 and its Prepaid Insurance account had a balance of $2,900. It was determined that $1,500 of the Prepaid Insurance had expired. The adjusted balance for Insurance Expense for the year would be

Bokhari Company prepares annual financial statements. Below are listed some selected accounts and their balances in the September 30 trial balance before any adjustments have been made for the year ended September 30, 2014. (Note: Debit column does not equal credit column because this is a partial listing of selected account balances.) An analysis of the account balances by the company's accountant provided the following additional information: 1. A physical count of office supplies revealed $1,200 on hand on September 30. 2. A one-year life insurance policy was purchased on June 1 for $5,400. 3. Office equipment is expected to have a life of 5 years. Depreciation is recorded monthly. 4. The amount of rent received in advance that remains unearned at September 30 is $500. Instructions Prepare the adjusting entries that should be made by Bokhari Company on September 30.

Prepare the required end-of-period adjusting entries for each independent case listed below. Case 1 Thomas Company, a private company, began the year with a $3,000 balance in the Office Supplies account. During the year, $8,500 worth of additional office supplies were purchased. A physical count of office supplies on hand at the end of the year revealed that $5,100 worth of office supplies were on hand at year end. No adjusting entry has been made until year end. Case 2 Carson Company has a calendar year-end accounting period. On July 1, the company purchased office equipment for $28,800. It is estimated that the office equipment will have a useful life of six years. No adjusting entry has been made until year end. Case 3 Chan Realty is in the business of renting several apartment buildings and prepares monthly financial statements. It has been determined that 3 tenants in $600 per month apartments and one tenant in a $1,000 per month apartment had not paid their August rent as of August 31. 1. A one-year insurance policy costing $3,600 was purchased on January 1, 2014. At that time the full amount was debited to prepaid insurance. 2. A physical inventory count on January 31, 2014 revealed $800 in supplies were still remaining. 3. Land and building were purchased on February 1, 2013 at a cost of $160,000. The building has an expected useful life of 20 years. The purchase was financed by paying $70,000 in cash and the balance on a 2-year, 8% note payable. Interest on the note is due at maturity. 4. Unearned service revenue related to a client retainer paid on January 15, 2014. On January 31, 2014, one-quarter of this amount has been earned. Instructions Prepare the adjusting journal entries required at January 31, 2014.

A company spends $10 million dollars for an office building. Over what period of time should the cost be written off?

The following ledger accounts are used by the Runway Race Track: Cash Accounts Receivable Prepaid Printing Prepaid Rent Unearned Admissions Revenue Note Payable Interest payable Admissions Revenue Concessions Revenue Interest Expense Printing Expense Rent Expense Instructions For each of the transactions below, prepare the journal entry (if one is required) to record the initial transaction and then prepare the adjusting entry, if any, required on November 30, the end of the fiscal year. a. On November 1, paid rent on the track facility for three months, $105,000. b. On November 1, sold season tickets for admission to the racetrack. The racing season is year-round with 25 racing days each month. Season ticket sales totalled $900,000. c. On November 1, borrowed $150,000 from their bank by issuing a 6% note payable due in three months. Interest is payable at maturity. d. On November 5, schedules for 20 racing days in November, 25 racing days in December and 15 racing days in January were printed for $3,000. e. The accountant for the concessions company reported that gross receipts for November were $140,000. Ten percent is due to Runway and will be remitted by December 10.

Adjusting entries are needed a) every time cash is received. B) every time financial statements are prepared. C) every time expenses are incurred or revenue is performed. D) never if you are reporting on an annual basis.

What is the "maximum" time frame for preparing adjusting entries under both ASPE and IFRS?

Failure to prepare an adjusting entry at the end of the period to record an accrued expense would cause

Cambrian Inc, a publicly traded company has recently fired their accountant due to several errors discovered in the accounting records. Victor, President of Cambrian Inc. has asked you to prepare the adjusting entries for the following transactions: 1. Signed a $72,000 contract to provide our services over 7 weeks. As of today we have only completed 2 weeks of services, however have not yet billed or recorded any amounts. 2. Received several operating bills which have not yet been recorded. Utilities $700, Victor's personal cell phone $350, and property taxes $1,750. 3. A note payable was obtained in the amount of $100,000 for 2 years. Interest is 4.75% annually. Interest on a note payable is due the 15 of each month. Assuming we correctly recorded our last interest payment on June 15, please record the proper entry (if any) for June 30. 4. Fired one employee on Wednesday. I have 4 remaining employees. Each employee is paid $125 per day. I pay all my employees every Friday for the 5 weekdays that they have worked.

On July 1 the Fog Forest Gallery paid $4,000 to Tapley Realty for 4 months rent beginning July 1. Prepaid Rent was debited for the full amount. If financial statements are prepared on August 31, the adjusting entry to be made by the Fog Forest is

Adjusting entries are required

An accumulated depreciation account

Accumulated depreciation is a contra asset account.

A furniture factory's employees work overtime to finish an order that is sold on February 28. The office sends a statement to the customer in early March and payment is received by mid-March. According to the expense recognition criteria the overtime wages should be expensed in

Which of the following is NOT considered an accrued expense account?

Adjusting entries are often made because some business events are NOT recorded as they occur.

If an Interest Receivable account is debited in an adjusting entry, then the account credited will be Interest Revenue.

Accrued revenues are

The useful life of an asset is always known at the time the asset is purchased.