Adjusting Entries CR - Harper College
Revised Summer 2016Chapter ReviewACCOUNTING FORADJUSTING ENTRIESKey Terms and Concepts to KnowThe Accounting Cycle (steps 5 and 6): Prepare and post adjusting entries Prepare adjusted trial balanceTransactions: External transactions occur between two different entities and are easy to recordbecause there are always source documents evidencing the transaction Internal transactions occur within a single entity and are more difficult to recordbecause source documents my not always be presentAccounting Principles Matching Principleo Forms the basis of accrual accountingo States that revenue earned and the costs incurred to produce that revenuemust be recorded in the same period Revenue Recognition Principleo States that revenue must be recognized (recorded) in the period in which itis earned Expense Recognition Principle (same as the matching principle)o States that expenses must be recorded in the period in which the relatedrevenue was recognizedAccrual Basis Accounting: Accrual vs. Cash Basis Accounting Deferred Expenses (prepaid expenses) Deferred Revenues (unearned revenues) Accrued Expenses (accrued liabilities) Accrued Revenues (accrued assets) Unbilled vs. unearned revenuesPage 1 of 28
Revised Summer 2016Chapter ReviewJournalizing adjusting entries Always have at least one income statement account (revenue or expense) andone balance sheet account (asset or liability) Never recorded for cash, dividends, capital stock or retained earningsEffects on the financial statements will be if adjusting entries are omittedType of AdjustingEntryDeferred ExpensesDeferred RevenuesAccrued ExpensesEffect of OmittingOn AccountBalanceUnderstatesexpenseOverstates assetAdjusting EntryOn FinancialstatementsOverstates netincomeOverstates totalassetsIncrease revenueUnderstaterevenueUnderstate netincomeDecrease liabilityOverstate liabilityIncrease expenseUnderstateexpenseUnderstate liabilityOverstate totalliabilitiesOverstates netincomeUnderstate totalliabilitiesUnderstate netincomeUnderstates totalassetsWhat AdjustingEntry DoesIncrease expenseDecrease assetIncrease liabilityIncrease revenueAccrued RevenuesIncrease assetUnderstaterevenueUnderstate assetDepreciation All long-lived assets are depreciated except for land Depreciation accounts for the decline in usefulness of a long-lived asset over itsuseful life Systematically records a portion of the cost of a long-lived asset as an expense tomatch against the revenue in the accounting period Depreciation expense is frequently calculated using the straight-line method Adjusting entry for depreciation is alwaysDepreciation expenseAccumulated depreciationxxxxxx The asset account is NOT credited for the decline in value; instead the credit isrecorded in a contra-asset account, accumulated depreciationPage 2 of 28
Revised Summer 2016Chapter Review Contra-asset means an account on the asset side of the accounting equation orbalance sheet which has a normal credit balance Net Book Value is the balance in the asset account less the balance in the relatedaccumulated depreciation accountAdjusted Trial Balance: Starts with trial balance before adjustments Adds or deducts adjusting entries as appropriate Forms the basis for preparing financial statementsPage 3 of 28
Revised Summer 2016Chapter ReviewKey Topics to KnowAdjusting Entries Adjusting entries are required to record internal transactions and to bring assetsand liability accounts to their proper balances and record expenses or revenues inthe proper accounting period. Therefore adjusting entries always affect one income statement account (revenueor expense) and one balance sheet account (asset or liability). Adjusting entries are prepared either when:o The current unadjusted balance in the account is known and the amount ofthe activity to be adjusted is knowno The current unadjusted balance in the account is known and the requiredbalance after adjustment is known. There are two basic types of adjusting entries: Deferrals and AccrualsExample #1J Company has a 1,000 unadjusted balance in the Office Supplies account onDecember 31.Required:a)b)What is the proper adjusting entry if Johnson could determineThe amount of supplies remaining unused?The amount of supplies actually used?Solution#1a): If J Company simply counted the remaining supplies on December 31 anddetermined that they had a cost of 450, the Office Supplies account would looklike this:Office SuppliesUnadjustedbalanceADJUSTMENT- Required endingbalance 1,000450Page 4 of 28?Supplies used
Revised Summer 2016Chapter ReviewThe adjustment would be: 1,000 – 450 550, the amount used.Dec. 31Supplies expenseOffice Supplies550550b): If J Company had required employees to fill out a form noting the supplies usedeach time they were taken from the supply cabinet, the supplies used would addup as 550. The Office Supplies account would look like this:Office SuppliesUnadjustedbalanceADJUSTMENT- Required endingbalance 1,000550Supplies used?The adjustment would be the amount used, 550Dec. 31Supplies expenseOffice Supplies550550Notice several things about the adjusting entry: The entry was the same in both situations. The entry was made for the amount of activity or change in the account duringthe period. The entry included one balance sheet account, Office Supplies and one incomestatement account, Supplies Expense. The ending balance in the account WAS NOT part of the adjusting journal entry.Rather, the adjusting entry was recorded to create the proper ending balance inthe account.Deferred Revenue and Expense Deferrals occur when cash changes hands prior to when the revenue is earned orexpense is incurred. Recording the revenue or expense is postponed or deferreduntil a subsequent economic event has occurred which causes revenue to beearned or expense to be incurred. Deferred Revenues (also referred to as unearned revenue) are initially recorded asa liability and adjusted at the end of the period for the portion that has beenPage 5 of 28
Revised Summer 2016Chapter Reviewearned. This occurs when payment is received in advance of performing theservice.Any Date(Cash received in advance)CashUnearnedRevenueDec. 31Unearned RevenueFees Earned(Amount earned as of year-end) Deferred Expenses (also referred to as prepaid expenses) are initially recorded asassets and adjusted at the end of the period for the portion that has been used upor expired.Any DatePrepaid InsuranceCash(Cost of insurance policy)Dec. 31Insurance Expense(Portion of policy that hasexpired)Prepaid InsuranceAccrued Revenue and Expense Accruals occur when revenue is earned or expense is incurred prior to the cashchanging hands. Deferred revenues and deferred expenses have not beenrecorded prior to preparing and recording the adjusting entry. Accrued Revenues – are revenues that have been earned, but have not beenrecorded. Payment has not been received.Dec. 31Accounts ReceivableFees Earned(amount earned as of year-end) Accrued Expenses – are expenses that have been incurred and a debt or liability isowed to a third party; however neither the expenses nor liability have beenrecorded.Dec. 31Interest ExpenseInterest Payable(amount owed as of year-end)Page 6 of 28
Revised Summer 2016Chapter ReviewExample #2The following information is available as of year-end.a.b.c.d.e.f.g.Unexpired insurance at December 31Supplies on hand at December 31Depreciation of building for the yearDepreciation of equipment for the yearRevenue unearned at December 31Accrued salaries and wages at December 31Fees earned but unbilled on December 31F CompanyTrial BalanceDecember 31CashAccounts ReceivablePrepaid InsuranceSuppliesLandBuildingAccumulated Depreciation-BldgEquipmentAccumulated Depreciation-Equip.Accounts PayableUnearned RevenueCapital StockRetained EarningsDividendsFees EarnedSalaries and Wages ExpenseUtilities ExpenseAdvertising ExpenseRepairs ExpenseMiscellaneous ExpenseTotalsRequired: 1,500 400 1,750 5,800 2,000 2,300 4,850 023,20018,00011,5004,050 430,200 86,70061,3007,5006,00015,30054,000199,400 430,200Journalize the adjusting entries and label them as accruals ordeferrals, adding accounts as needed.Page 7 of 28
Revised Summer 2016Chapter ReviewSolution #2a)b)c)d)e)f)g)Deferred ExpenseInsurance ExpensePrepaid Insurance2,900Deferred ExpenseSupplies ExpenseSupplies1,550Deferred ExpenseDepreciation Expense-BldgAccum. Depr.- Bldg1,750Deferred ExpenseDepreciation Expense-EquipAccum. Depr.-Equipment5,800Deferred RevenueUnearned RevenueFees Earned4,000Accrued ExpenseWages ExpenseWages Payable2,300Accrued RevenueAccounts ReceivableFees ple #3Refer to the data in Example #2.Required:Determine the adjusted balances of the accounts and prepare anadjusted trial balance.Page 8 of 28
Revised Summer 2016Chapter ReviewSolution #3F CompanyAdjusted Trial BalanceDecember 31, 20--CashAccounts ReceivablePrepaid InsuranceSuppliesLandBuildingAccumulated Depreciation-Bldg.EquipmentAccumulated Depreciation-Equip.Accounts PayableSalaries & Wages PayableUnearned RevenueCapital StockRetained EarningsDividendsFees EarnedSalaries and Wages ExpenseUtilities ExpenseAdvertising ExpenseRepairs ExpenseDepreciation Expense-EquipmentDepreciation Expense-BldgMiscellaneous ExpenseInsurance ExpenseSupplies ExpenseTotalsPage 9 of 28 3,20018,00011,5005,8001,7504,0502,9001,550 444,900 88,45067,1007,5002,3002,00015,30054,000208,250 444,900
Revised Summer 2016Chapter ReviewAdjusting Entries and Errors Failure to journalize and post adjusting entries at the end of the period will causemultiple financial statement items to be misstated. At least one balance sheet account and one income statement account for eachentry not made or incorrectly made.Example #4A Company failed to record accrued wages of 5,000 at the end of the period.Required:a)b)c)Determine the adjusting entry that should have been made.Determine which accounts and financial statements would havebeen affected by the error.Determine whether the accounts and financial statements wouldhave been understated or overstated and the amount of themisstatement.Solution #4The adjusting entry should have been:Wages ExpenseWages Payable5,0005,000This entry should have increased wages expense with a debit and increased wagespayable with a credit. Failing to record this entry caused the following errors:a)b)c)d)e)f)Wages Expense will be understated by 5,000, soTotal Expenses will be understated by 5,000, soNet Income will be overstated by 5,000, and when closed to RE,Retained Earnings will be overstated by 5,000.Wages Payable will be understated by 5,000, soTotal Liabilities will be understated by 5,000Page 10 of 28
Revised Summer 2016Chapter ReviewExample #5At the end of October, the first month of operations, the following selected data weretaken from the financial statements of C Company:Net Income for OctoberTotal Assets at October 31Total Liabilities at October 31Total Stockholders’ Equity at October 31 102,500228,75060,500168,250The following adjusting entries were omitted at the end of the month:a)b)c)d)Supplies used during OctoberDepreciation of equipment for OctoberUnbilled fees earned at October 31Accrued wages at October 31Required:a)b) 800 3,000 1,200 500Journalize the entries to record the omitted adjustments.Determine the correct amounts for Net Income, Total Assets, TotalLiabilities and Total Stockholders’ Equity as of October 31.Solution #5a.b.c.d.Supplies ExpenseSuppliesDepreciation Exp.-Equip.Accum. Depr.- Equip.Accounts ReceivableFees EarnedWages ExpenseWages PayableReported BalanceCorrections:Adjustment (a)Adjustment (b)Adjustment (c)Adjustment (d)Corrected Balance8003,0001,2005008003,0001,200500Net Income 102,500Assets 228,750LiabilitiesEquity 60,500-800-3,000 1,200-500 99,400-800-3,000 1,200-- 226,150------ 500 61,000-800-3,000 1,200-500 165,150Page 11 of 28
Revised Summer 2016Chapter ReviewTrial Balance A Trial Balance is a summary of all account balances in the general ledger. Eachaccount and its balance (debit or credit) is listed on the trial balance. Total of alldebit account balances must equal the total of all credit debit balances. A trial balance is useful in determining whether the general ledger is in balance(total debits equal total credits). It will not identify errors in the general ledger orin preparing the trial balance for which debits equal credits or if an entry is notposted to the general ledger at all. Trial balances are typically prepared three times during the accounting cycle:o Unadjusted which is prepared prior to adjusting entrieso Adjusted which is prepared after adjusting entries and is the basis forpreparing financial statementso Post-closing which is prepared after closing entries.Page 12 of 28
Revised Summer 2016Chapter ReviewPractice ProblemsPractice Problem #1S Company provided the following financial information as of year-end, August 31.a)b)c)d)e)f)Supplies on hand on August 31Depreciation of equipment during the yearRent expired during the yearWages accrued, but not paid at August 31Unearned fees at August 31Unbilled fees at August 31Accounts ReceivableSuppliesPrepaid RentEquipmentAccumulated DepreciationEquipmentCapital StockDividendsUnearned FeesFees EarnedWages ExpenseRent ExpenseDepreciation ExpenseSupplies 01,98020,00073,80024,7002,000Adjust.Entry( / - ) 800 3,400 11,000 2,500 1,500 ,200Journalize the adjusting entries and label them as accruals ordeferrals.Update the account balances of the selected accounts in the chart.Page 13 of 28
Revised Summer 2016Chapter ReviewPractice Problem #2At the end of January, the first month of operations, the following selected data weretaken from the financial statements of W Company:Net Income for JanuaryTotal Assets at January 31Total Liabilities at January 31Total Stockholders’ Equity at January 31 88,450276,00077,800198,200The following adjusting entries were omitted at the end of the month:a.b.c.d.Required:Unbilled fees earned at January 31Supplies used during January 31Depreciation of equipment for JanuaryAccrued wages at January 31a)b) 2,200 1,800 7,500 1,500Journalize the entries to record the omitted adjustments.Determine the correct amounts for Net Income, Total Assets, TotalLiabilities, and Total Stockholders’ Equity as of January 31.Page 14 of 28
Revised Summer 2016Chapter ReviewPractice Problem #3H Company’s unadjusted trial balance for the current year follows:H CompanyTrial BalanceDecember 31CashPrepaid property insurancePrepaid life insuranceShop suppliesShop equipmentAccumulated depreciation - equipmentBuildingAccumulated depreciation—buildingLandUnearned rentAccounts payableLong-term notes payableCommon stockRetained earningsRent earnedFees earnedWages expenseUtilities expenseProperty taxes expenseInterest expenseTotal 0 140,590 7703,8407,6003,72050,0001,00047,8602,40023,400 140,590Additional information:a) A life insurance policy examination showed 1,040 of expired insurance.b) An inventory count showed 210 of unused shop supplies still available.c) Depreciation expense on shop equipment, 350.d) Depreciation expense on the building, 2,020.e) A beautician is behind on space rental payments, and this 200 ofaccrued revenues was unrecorded at the time the trial balance wasprepared.f) 2,800 of the Unearned Rent account balance was still unearned byyear-end.g) The one employee, a receptionist, works a five-day workweek at 50per day. The employee was paid last week but has worked Tuesdaythrough Friday this week for which she has not been paid.Page 15 of 28
Revised Summer 2016Chapter Reviewh)Three months' property taxes, totaling 450, have accrued. Thisadditional amount of property taxes expense has not been recorded.i) One month's interest on the note payable, 600, has accrued but isunrecorded.j) The Prepaid Property Insurance account has a 2,400 debit balancebefore adjustment. An examination of insurance policies shows 950 ofunexpired insurance.k) The company has three office employees who each earn 100 per dayfor a five-day workweek that ends on Friday. The employees were paidlast Friday and worked full days on Monday, Wednesday and Friday thisweek for which they have not been paid.l) On November 1, the company received 6 months' rent in advance froma tenant whose rent is 700 per month. The 4,200 was credited to theUnearned Rent account.m) The company has not received a water and sewer services bill forDecember. Based on prior months’ bills, the bill is expected to be 1,000 for the month.Required:Journalize the necessary adjusting entriesPractice Problem #4During the current year ended December 31, clients paid fees in advance for accountingservices amounting to 15,000. These fees were recorded in an account called UnearnedAccounting Fees. 3,500 of these fees remained unearned on December 31 of this year.The company also performed tax services for several clients prior to December 31, butdid not issue invoices until after year-end.Required:Journalize the necessary adjusting entriesPage 16 of 28
Revised Summer 2016Chapter ReviewPractice Problem #5Following is a list of year-end adjusting entries that were not made.1.2.3.4.5.6.Required:ErrorRevenuesDid not recorddepreciation for thisperiodDid not recordunpaid telephone billDid not adjustunearned revenueaccount for revenueearned this periodDid not adjust shopsupplies for suppliesused this periodDid not accrueemployee salariesfor this periodRecorded rentexpense owed witha debit to insuranceexpense and a creditto rent payableExpenses Assets Liabilities EquityComplete the table using a " " for overstatements, a "-" forunderstatements, and a "0" for no effect.Page 17 of 28
Revised Summer 2016Chapter ReviewTrue / False Questions1.Accrual-basis accounting involves recording revenues when earned andrecording expenses with their related revenues.True False2.Adjusting entries should be prepared after financial statements are prepared.a)True False3.Prepaid expenses involve payment of cash (or an obligation to pay cash) forthe purchase of an asset before the expense is incurred.True False4.Unearned revenues occur when cash is received after the revenue is earned.True False5.The adjusting entry for an accrued expense always includes a debit to anexpense account and a credit to a liability account.True False6.Adjusting entries for accrued revenues always includes a debit to a liabilityaccount and a credit to a revenue account.True False7.An adjusting entry can never record a transaction that exchanges one asset foranother asset.True False8.According to the revenue recognition principle, if a company provides servicesto a customer in the current year but does not collect cash until the followingyear, the company should report the revenue in the current year.True False9.The matching principle states that we recognize expenses in the same periodas the revenues they help to generate.True False10. Adjusting entries involve recording events that have occurred but that have notyet been recorded by the end of the period.True FalsePage 18 of 28
Revised Summer 2016Chapter Review11. The accrual basis of accounting recognizes revenues when cash is receivedfrom customers.True False12. Prior to recording adjusting entries at the end of an accounting period, someaccounts may not show correct balances even though all transactions wereproperly recorded.True False13. Prepaid expenses, such as prepaid rent and prepaid insurance, representliabilities for a business until they are used.True False14. When a company receives cash in advance from a customer, it should debitCash and credit Accounts Receivable.True False15. The cost of a long-term asset, such as equipment, is transferred to expense asit is used during its life.True FalsePage 19 of 28
Revised Summer 2016Chapter ReviewMultiple Choice Questions1. The revenue recognition concepta)b)c)d)Determines when revenue is credited to a revenue account.States that revenue is not recorded until the cash is received.Controls all revenue reporting for the cash basis of accounting.Is in conflict with accrual accounting.2. The matching principle:a) Addresses the relationship between the journal and the ledger.b) Determines the normal balance of an account.c) Requires that expenses related to revenue and revenue be reported at thesame time.d) Requires that the dollar amount of debits equal the dollar amount of creditsin a journal entry.3. Using accrual accounting, expenses are recorded only:a)b)c)d)When they are incurred and paid at the same timeIf they are paid before they are incurredIf they are paid after they are incurredWhen they are incurred, whether or not cash is paid4. The primary difference between deferred and accrued expenses is thatdeferred expenses have:a) Been recorded and accrued expenses have not been incurredb) Been incurred and accrued expenses have notc) Not been incurred and accrued expenses have been incurredd) Not been recorded and accrued expenses have been incurred5. Adjusting entries affect at least one:a)b)c)d)Revenue and one expense accountAsset and one liability accountRevenue and one stockholders’ equity accountIncome statement account and one balance sheet accountPage 20 of 28
Revised Summer 2016Chapter Review6. The year-end balance in the prepaid rent account before adjustment is 18,000, representing three months’ rent paid on December 1. The adjustingentry required on December 31 is:a) Debit Rent Expense, 6,000; credit Prepaid Rent, 6,000b) Debit Prepaid Rent, 6,000; credit Rent Expense, 6,000c) Debit Rent expense, 12,000; credit Prepaid Rent, 12,000d) Debit Prepaid Rent, 12,000; credit Rent expense, 12,0007. At the end of the fiscal year, the usual adjusting entry for accrued salariesowed to employees was omitted. Which of the following statements is true?a) Stockholders’ equity at the end of the year was overstatedb) Salary Expense for the year was overstatedc) The total of the liabilities at the end of the year was overstatedd) Net Income for the year was understated8. What is the proper adjusting entry at June 30, the end of the fiscal year, basedon a supplies account balance before adjustment, 7,200, and suppliesinventory on June 30, 1,200?a) Debit Supplies, 1,200; credit Supplies Expense, 1,200b) Debit Supplies Expense, 1,200; credit Supplies, 1,200c) Debit Supplies Expense, 6,000; credit Supplies, 6,000d) Debit Supplies, 6,000; credit Supplies Expense, 6,0009. A business enterprise pays weekly salaries of 45,000 on Friday for a five-dayweek ending on that day. The adjusting entry necessary at the end of thefiscal period ending on Thursday is:a) Debit Salaries Payable, 36,000; credit Cash, 36,000b) Debit Salary Expense, 36,000; credit Dividends, 36,000c) Debit Salary Expense, 36,000; credit Salaries Payable, 36,000d) Debit Dividends, 36,000; credit Cash, 36,00010. At the end of the fiscal year, M Company omitted the usual adjusting entry fordepreciation on equipment. Which of the following statements is true?a) Total assets will be understated at the end of the current year.b) The balance sheet, income statement, and retained earnings statement willbe misstated for the current year.c) Expenses will be overstated at the end of the current year.d) Net income will be understated for the current year.Page 21 of 28
Revised Summer 2016Chapter Review11. Data for an adjusting entry described as “accrued wages, 800” means todebit:a) Capital Stock and credit Wages Payableb) Wages Expense and credit Wages Payablec) Wages Payable and credit Wages Expensed) Accounts Receivable and credit Wages Expense12. If cash is received in advance from a customer, thena) Assets will decrease.b) Retained earnings will increase.c) Liabilities will increase.d) Stockholders’ equity will decrease.13. If the adjusting entry is not made for unearned revenues the result will be toa) Overstate assets and understate liabilities.b) Overstate liabilities and understate revenues.c) Understate net income and overstate retained earningsd) Understate retained earnings and overstate revenues.14. G Company received a check for 30,000 on October 1 which represents a oneyear advance payment of rent on an office it rents to a client. UnearnedRental Revenue was credited for the full 30,000. Financial statements areprepared on December 31. The appropriate adjusting journal entry to makeon December 31 would bea) Debit Rental Revenue 2,500; credit Unearned Rental Revenue 2,500.b) Debit Unearned Rental Revenue 7,500; credit Rental Revenue 7,500c) Debit Unearned Rental Revenue 22,500; credit Rental Revenue 22,500d) Debit Rental Revenue 22,500; credit Unearned Rental Revenue 22,50015. If revenues are recognized only when a customer pays, what method ofaccounting is being used?a) Accrual basisb) Recognition basisc) Cash basisd) Matching basisPage 22 of 28
Revised Summer 2016Chapter ReviewSolutions to Practice ProblemsPractice Problem #1a)b)c)d)e)f)Deferred ExpenseSupplies ExpenseSupplies1,180Deferred ExpenseDepreciation Expense-EquipAccum. Depr.- Equip3,4001,180Deferred ExpenseRent ExpensePrepaid rent11,000Accrued ExpenseWages ExpenseWages Payable2,500Deferred RevenueUnearned RevenueFees Earned6,000Accrued RevenueAccounts ReceivableFees Earned5,2603,40011,0002,5006,000Page 23 of 285,260
Revised Summer 2016Chapter ReviewAccounts ReceivableSuppliesPrepaid RentEquipmentAccumulated DepreciationEquipmentCapital StockWages PayableUnearned FeesFees EarnedWages ExpenseRent ExpenseDepreciation ExpenseSupplies 5,80024,70042,20020,48007,50099,650Adjustment( / - ) 5,260-1,180-11,000---- 3,400 2,500-6,000 11,260 2,500 11,000 3,400 1,180152,330 80000 20,48002,50001,5000 110,91044,700011,00003,40001,1800163,490 163,490Practice Problem #2a.Accounts ReceivableFees Earned2,200b.Supplies ExpenseSupplies1,800c.Depreciation Expense-Equip.Accum. Depr.-Equip.7,500d.Wages ExpenseWages Payable1,500Reported BalanceCorrections:Adjustment (a)Adjustment (b)Adjustment (c)Adjustment (d)Corrected Balance2,2001,8007,5001,500Net Income 88,450Assets 276,000Liabilities 77,800Equity 198,200 2,200-1,800-7,500-1,500 79,850 2,200-1,800-7,500-- 268,900------ 1,500 79,300 2,200-1,800-7,500-1,500 189,600Page 24 of 2828,100
Revised Summer 2016Chapter ReviewPractice Problem #3a) Insurance expensePrepaid life insuranceb) Shop supplies expenseShop supplies 790 - 210 580 usedc) Depreciation expense - equipmentAccumulated depreciation - equipmentd) Depreciation expense, BuildingAccumulated depreciation – Buildinge) Accounts receivableRent earnedf) Unearned rentRent earned 7,600 - 2,800 4,800 earnedg) Wages expenseWages payable 50/day * 4 days 200h) Property taxes expenseProperty taxes payablei) Interest expenseInterest payablej) Insurance expensePrepaid property insurance 2,400 – 950 1,450k) Wages expenseWages payable 100/day * 3 days * 3 employees 900l) Unearned rentRent income 4,200/6mo 700/mo * 2 mo 1,400m) Utilities expenseAccounts payablePage 25 of ,000
Revised Summer 2016Chapter ReviewPractice Problem #4Unearned Accounting FeesAccounting Fees Earned11,500Accounts ReceivableTax services Earned8,30011,5008,300Practice Problem #51.2.3.4.5.6.ErrorRevenues Expenses Assets Liabilities EquityDid not recorddepreciation for this0- 0 periodDid not record0-0- unpaid telephone billDid not adjustunearned revenue-00 -account for revenueearned this periodDid not adjust shopsupplies for supplies0- 0 used this periodDid not accrueemployee salaries0-0- for this periodRecorded rentexpense owed witha debit to insurance00000expense and a creditto rent payablePage 26 of 28
Revised Summer 2016Chapter ReviewSolutions to True / False lse - adjusting entries should be prepared before financialstatements are prepared.TrueFalse - unearned revenues occur when cash is received before therevenue is earned.TrueFalse - the debit is to an asset account.TrueTrueTrueTrueFalse – Accrual accounting recognizes revenue when it is earned,regardless of whether the cash has been received.TrueFalse – prepaid expenses are assetsFalse - the credit should be to Unearned Revenue, a liability.TruePage 27 of 28
Revised Summer 2016Chapter ReviewSolutions to Multiple Choice AACCBBCBBCPage 28 of 28
Total Liabilities at October 31 60,500 Total Stockholders’ Equity at October 31 168,250 The following adjusting entries were omitted at the end of the month: a) Supplies used during October 800 b) Depreciation of equipment for October 3,000 c) Unbilled fees earned at October 31 1,200 d) Accrued wages at October 31 500
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Oct 06, 2016 · Mary Higgins Clark . structured to produce books based on Disney characters and movies made from successful Random House books. Harper Collins Harper Collins was owned by NewsCorp. Harper Collins was founded in 1817 by brothers James and John Harper. Harper Collins had significant interests in the US, Canada, UK and Australia. It published .
Adjusting Entries and the Completion of the Accounting Cycle . . journal entries, will use this method when they make journal entries. The adjustment at . balance sheet and do not affect or appear in the income statement until the revenue is earned. In this example, a company that does real estate management receives an advance .
CHAPTER 2 Analyzing Transactions PE 2-1A 1. Debit and credit entries (c), normal debit balance 2. Credit entries only (b), normal credit balance 3. Credit entries only (b), normal credit balance 4. Debit entries only (a), normal debit balance 5. Credit entries only (b), normal credit balance 6. Debit and credit entries (c), normal credit balance
THE ADJUSTING PROCESS After studying this chapter, you should be able to: 1 Explain how the matching concept relates to the accrual basis of accounting. 2 Explain why adjustments are neces-sary and list the characteristics of adjusting entries. 3 Journalize entries for
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A student should know: 3.1 How to manage lists (customers, vendors, items, etc.). List management include: 3.1.1 Adding new entries 3.1.2 Deleting entries 3.1.3 Editing entries 3.1.4 Merging entries Exam Objectives Domain 4.0 Items A student should know: 4.1 How QuickBooks uses items to perform the necessary accounting entries
AGMA American Gear Manufacturers Association AIA American Institute of Architects. AISI American Iron and Steel Institute ANSI American National Standards Institute, Inc. AREA American Railway Engineering Association ASCE American Society of Civil Engineers ASME American Society of Mechanical Engineers ASTM American Society for Testing and .
