Chapter 3 The Adjusting Process Study Guide
Chapter 3The Adjusting ProcessStudy Guide SolutionsFill-in-the-Blank Equations1. Book value2. Depreciation expense for the current year3. Supplies expense4. ExpenseExercises1. Determine if each of the following descriptions relates to an accrual or a cash basis ofaccounting.a. Cashb. Accrualc. Accrual2. Determine whether each of the following is a characteristic of an accrual or a cash basisof accounting.a. Accrualb. Cashc. Cash3. Do the following independent situations relate to an accrual or a cash basis ofaccounting?a. Accrualb. Cashc. AccrualStrategy: Think of the cash basis of accounting as like putting money into a bankaccount. The income is shown when the money is put into the account, and theexpenses are shown when the money comes out of the account. The accrual basis ofaccounting is similar to the interest on the account. It is shown on the bankstatement when earned.1 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2Chapter 34. Determine whether each of the following accounts would need to be adjusted at theend of the period.a. Yesb. Yesc. No5. Determine whether each of the following accounts will require adjusting entries.a. Nob. Yesc. Yes6. Does each of the following accounts need year-end adjusting entries?a. Yesb. Noc. NoStrategy: The accounts that require adjustments include any accrued revenue,accrued expenses, unearned revenue, and prepaid expenses. Depreciation expensealso must be adjusted at the end of the year.7. Determine whether each of the following describes an accrued revenue, an accruedexpense, an unearned revenue, or a prepaid expense.a. Accrued expenseb. Unearned revenuec. Prepaid expense8. Do the following situations describe an accrued revenue, an accrued expense, anunearned revenue, or a prepaid expense?a. Accrued revenueb. Unearned revenuec. Prepaid expense 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Adjusting Process39. Is each of the following an accrued revenue, an accrued expense, an unearned revenue,or a prepaid expense?a. Accrued expenseb. Accrued revenuec. Prepaid expenseStrategy: First, determine if the item will be revenue or an expense to the company.Second, determine if it will create an asset or a liability to the company. Accruedrevenues and prepaid expenses are assets, while accrued expenses and unearnedrevenue are liabilities.10. Accrued Revenue A law firm allows its clients to pay on the tenth of every month forservices rendered rather than for each visit. Since the last billing cycle, the law firmprovided 200 hours of services at 80 per hour.a. 16,000; 200 hours since last cycle 80/hourb.Accounts Receivable16,000Fees Earned16,00011. Accrued Revenue An electrical company provides services for a new building at a rate of 50 per hour. Once completed, the owner of the building will pay for the total amountof hours worked. By the end of the year, the electrical company has worked 150 hoursat the building and expects to finish the project after working an additional 50 hours inthe next period.a. 7,500; 150 hours 50/hourAlthough the electrical company expects to spend 200 hours in total for the project, itcan only record the amount of accrued revenue to date. The additional 50 hours will berecorded in the next period.b.Accounts ReceivableFees Earned3,0003,000 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
4Chapter 312. Accrued Revenue By the end of the year, a CPA firm has provided a client with 30 hoursof service to prepare a tax return. The client agrees to pay for hours performed monthlyon the fifteenth of the following month. The CPA firm bills clients 35 per hour.a. 1,050; 30 hours 35/hourb.Accounts Receivable1,050Fees Earned1,05013. Accrued Expense A business’s lawyer charges 60 per hour to meet with the board ofdirectors. The business pays for the expense on the fifth of every month. By the end ofthe year, the board members and lawyer had met 51 hours since the last pay period.a. 3,060; 51 hours since last pay period 60/hourb.Legal Expense3,060Legal Fees Payable3,06014. Accrued Expense A company pays its employees every other Friday, with daily wages of 340, including weekends. The previous payday occurred on Friday, June 24.a. 2,040; 340/day 6 daysb.Wages Expense2,040Wages Payable2,04015. Accrued Expense A company pays its telephone bill on the fifteenth of each month at adaily rate of 15.a. 240; 15/day 16 daysb.Telephone ExpenseTelephone Utilities Payable240240Strategy: T accounts and timelines can be helpful when determining the amount of theadjustment. A timeline can show the time period the adjustment should reflect and avisual of the amount for each month/day during the period. Journal entries will alwayshave a balance sheet account and an income statement account. Remembering thenormal balance of the accounts can help determine if an amount is a debit or credit. 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Adjusting Process516. Unearned Revenue A new gym begins business in November, offering a special for itsmembership plan of one year for 240. During November, 12 people sign up for the planstarting December 1; during December, 20 people sign up for the plan startingDecember 15.a. A T account will be helpful because multiple signups and time periods wereinvolved. The company will record the unearned revenue for the November andDecember signups when the memberships are sold. At the end of the year, thecompany will need to make adjustments for the revenue earned in December.For the November signups, the gym can show one month of revenue earned. Forthe December signups, the gym should only show half a month of revenueearned since the memberships started December 15.Unearned MembershipRevenueMembership Revenue2,8804404,8002404402007,240b.Unearned Membership RevenueMembership Revenue440440 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6Chapter 317. Unearned Revenue A rental company owns a building from which it leases out multipleoffices. During the year, it received the following advance rental payments for one-yearleases from separate tenants: 24,000 in June, 36,000 in August, and 12,000 inOctober. The leases started the first of the month following the payment. Assume thatthese are the only advance rental payments received and that no adjusting entries weremade during the year.a. A T account will be best to show the separate advance payments and rentearned by December 31.Unearned Rent RevenueRent ,00012,0002,00046,000b.Unearned Rent Revenue26,000Rent Revenue26,00018. Unearned Revenue A magazine company sells a one-year subscription for 42 that willbegin the month after the payment is received. During November, the company sells200 subscriptions. The company did not sell any other subscriptions in the period.a. 1,400; 42 12 months 3.50 per month per subscription; 3.50 2 months 200 subscriptionsUnearned SubscriptionRevenueSubscription Revenue8,4001,4001,4001,4007,000b.Unearned Subscription RevenueSubscription Revenue1,4001,400 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Adjusting Process719. Prepaid Expense On June 1, Company A signed a rental agreement for a new buildingand paid 24,000 in advance for the year of rent beginning the same day.a. 14,000; 24,000 12 months 2,000 rent expense per month; 2,000 7months (June–December)b.Rent Expense14,000Prepaid Rent14,00020. Prepaid Expense At the beginning of the quarter, a company had 2,670 of supplies onhand. During the period, the company purchased 500 worth of supplies. At the end ofthe year, on December 31, the supplies on hand are 1,220.a. Use a T account to see how much of the supplies were used. To show the correctSupplies Expense, the purchase should also be shown in the account. Adding 2,670 and 500 shows the unadjusted balance ( 3,170). To find the adjustmentneeded, subtract the ending balance ( 1,220) from the unadjusted balance of 3,170 to find the Supplies Expense of 1,950.Supplies2,670500?1,220b.Supplies ExpenseSupplies1,9501,950 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8Chapter 321. Prepaid Expense On December 15, Company B paid 18,000 for a six-month insurancepolicy starting on that day.a. Insurance Expense: 1,500; 18,000 6 months 3,000 insurance expense permonth; 3,000 ½ monthPrepaid Insurance: Use a T account to find the balance at the end of the year.Prepaid Insurance18,0001,50016,500b.Insurance ExpensePrepaid Insurance1,5001,500Strategy: T accounts and timelines can be helpful when determining the amount of theadjustment. A timeline can show the time period the adjustment should reflect and avisual of the amount for each month/day during the period. Journal entries will alwayshave a balance sheet account and an income statement account. Remembering thenormal balance of the accounts can help determine if an amount is a debit or credit.22. Determine whether each of the following assets will be depreciated.a. Yesb. Noc. No23. Determine whether each of the following assets will have a contra asset forAccumulated Depreciation.a. Yesb. Yesc. No 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Adjusting Process924. Determine whether each of the following assets will require an adjusting entry fordepreciation.a. Nob. Yesc. YesStrategy: Fixed assets are not current assets. They are also used to produce theoperating income of the company. Land is never depreciated.25. A piece of machinery that was purchased on July 1 has an original cost of 10,000. Thecompany takes an annual depreciation of 1,500 a year.a.Depreciation Expense1,500Accumulated Depreciation—Machinery1,500b. 8,500; 10,000 – 1,500c. 5,500; 10,000 – 4,500 ( 1,500/year 3 years)The net book value is found by subtracting accumulated depreciation from the costof the machinery. The accumulated depreciation account includes the total of thedepreciation expenses recorded since the asset was purchased.MachineryAccumulated Depreciation10,00010,000d.MachineryAccumulated depreciationMachinery, netDepreciation Expense1,5001,5001,5001,5001,5001,5004,5004,500 10,000(4,500) 5,500 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
10Chapter 326. A company purchased a building for 200,000 on January 1 of Year 1. At the beginningof the third year, the company has accumulated depreciation of 25,000 for thebuilding, with an annual depreciation expense of 12,500.a.Depreciation Expense12,500Accumulated Depreciation—Building12,500b. Beginning: 175,000; 200,000 – 25,000Ending: 162,500; 200,000 – 37,500 ( 25,000 12,500)c.Building 200,000Accumulated depreciation(37,500)Building, net 162,50027. After three years, a company has accumulated depreciation of 9,000 on a piece ofequipment. The company paid 21,000 for the equipment and records a depreciationexpense of 3,000 per year.a.Depreciation Expense3,000Accumulated Depreciation—Equipment3,000b. Beginning: 12,000; 21,000 – 9,000Ending: 9,000; 21,000 – 12,000 ( 9,000 3,000)c.EquipmentAccumulated depreciationEquipment, net 21,000(12,000) 9,000Strategy: First, determine the cost of the fixed asset. Next, find the amount ofdepreciation that should be shown for the time period. Dates are important todetermine if the depreciation should be shown for a whole year or a few months ofthe year. The net book value will be the cost minus accumulated depreciation. Theaccumulated depreciation account is the total amount of depreciation expensesrecorded to date for the asset. 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Adjusting Process1128. If a company does not record each of the following adjusting entries, determine theimpact on the financial statements (overstated or understated assets, liabilities,stockholders’ equity, revenues, expenses, net income).a. Assets overstated, stockholders’ equity overstated, expenses understated, netincome overstatedb. Liabilities overstated, stockholders’ equity understated, revenues understated,net income understatedc. Liabilities understated, stockholders’ equity overstated, expenses understated,net income overstated29. If a company does not record each of the following adjusting entries, determine theimpact on the financial statements (overstated or understated assets, liabilities,stockholders’ equity, revenues, expenses, net income).a. Assets understated, stockholders’ equity understated, revenues understated, netincome understatedb. Assets overstated, stockholders’ equity overstated, expenses understated, netincome overstatedc. Liabilities overstated, stockholders’ equity understated, revenues understated,net income understated30. If a company does not record each of the following adjusting entries, determine theimpact on the financial statements (overstated or understated assets, liabilities,stockholders’ equity, revenues, expenses, net income).a. Liabilities understated, stockholders’ equity overstated, expenses understated,net income overstatedb. Assets overstated, stockholders’ equity overstated, expenses understated, netincome overstatedc. Assets understated, stockholders’ equity understated, revenues understated, netincome understated 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
12Chapter 3Strategy: The type of account that requires adjusting has a direct relationship withthe balance sheet. For example, the prepaid expense account is an asset. If theaccount is overstated, the assets will be overstated. The corresponding account thatshould have been debited/credited in the adjusting entry determines the effect onthe income statement. For example, expenses are debited when adjusting theprepaid expense account. If the entry is not made, expenses will be understated.Overstatement of expenses or understatement of revenues will cause net income tobe understated, while the understatement of expenses and overstatement ofrevenues cause net income to be overstated. Since net income flows through toretained earnings, if net income is overstated, stockholders’ equity will also beoverstated.31. Will the following independent errors cause the debit or credit totals on the adjustedtrial balance to be unequal? If so, by how much?a. The totals will be equal, although not at the right amount.b. The totals will be unequal. The credits will be higher by 4,050.c. The totals will be equal, although the entries were not made to the correctaccounts.32. By how much will the debit or credit totals be higher on the adjusted trial balance dueto the following independent errors?a. The credits will be higher by 100.b. The debits will be higher by 405.c. The debits will be higher by 90.33. Determine by how much, if at all, the adjusted trial balance will be incorrect due to thefollowing independent errors.a. The totals will be equal, although the entries were not made to the correctaccounts.b. The debits will be higher by 100.c. The debits will be higher by 270.Strategy: All journal entries should have equal debits and credits. If the journalentries do not have debits that add to the same amount of the credits, theunadjusted trial balance will not have equal debits and credits. 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Adjusting Process1334. Identify any favorable and unfavorable trends in the following income statements bypreparing a vertical analysis. (Round percentages to two decimal places.)Becker CorporationIncome StatementsFor the Years Ended December 31Revenues 394,000Year 2Year 1100.00% 212,500100.00% 79,00020.05% 65,00030.59%Rent expense19,0004.82%18,0008.47%Utilities expense21,0005.33%14,2006.68%Interest expense7,5001.90%7,8003.67% 126,50032.11% 105,00049.41% 267,50067.89% 107,50050.59%Operating expenses:Wages expenseTotal operating expensesNet incomeThe income statements show an increase in revenues. Net income as a percentage of therevenues also increased, showing a favorable trend. The expenses of the company are notincreasing as rapidly as the revenues, indicating a favorable trend for the overall operatingexpenses and each operating expense, since each decreased as a percentage of revenues. 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
14Chapter 335. Identify any favorable and unfavorable trends in the following income statements bypreparing a vertical analysis. (Round percentages to two decimal places.)Red CorporationIncome StatementsFor the Years Ended December 31Revenues 530,000Year 2100.00%Year 1 525,000100.00% 90,50017.08% .48%15,0002.83%12,0002.29% 148,75028.07% 142,75027.19% 381,25071.93% 382,25072.81%Operating expenses:Wages expenseRent expenseUtilities expenseInsurance expenseTotal operating expensesNet incomeAlthough the revenues increased, the net income decreased due to increases in theoperating expenses. The wages expense, rent expense, and insurance expense accountsdemonstrate unfavorable trends. Although the utilities expense account remainsconstant, its percentage of revenues demonstrates a favorable trend. Total operatingexpenses increased as a percentage of revenues, which is an unfavorable trend. 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Adjusting Process1536. Identify any unfavorable and favorable trends in the following income statements bypreparing a vertical analysis. (Round percentages to two decimal places.)Apple Tree CorporationIncome StatementsFor the Years Ended December 31Revenues:Year 2Year 1Sales revenue 675,00078.95% 650,00073.86%Rent revenue180,00021.05%230,00026.14% 855,000100.00% 880,000100.00% 90,50010.58% 0.99%Advertising expense13,2001.54%14,0001.59%Insurance expense15,0001.75%15,0001.70% 175,70020.55% 175,70019.97% 679,30079.45% 704,30080.03%Total revenuesOperating expenses:Wages expenseRent expenseUtilities expenseTotal operating expensesNet incomeFor Year 2, the sales revenue increased as a percentage of total revenues, while the rentrevenue decreased as a percentage of total revenues. Wages Expense and AdvertisingExpense show favorable trends. Rent Expense, Utilities Expense, and Insurance Expenseall have unfavorable trends. Although Insurance Expense remains constant, because thetotal revenues decreased, it will cause the ratio to be a higher percentage of revenue.Strategy: First, take each line item as percentage of total revenues. Next, look forchanges in this year and the previous year. If there are any, determine if each changeis favorable or unfavorable. If favorable, it means the company is operating moreefficiently. Unfavorable trends suggest that a company is not operating as efficientlyas it could. 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3. Supplies expense . 4. Expense . Exercises . 1. Determine if each of the following descriptions relates to an accrual or a cash basis of accounting. a. Cash . b. Accrual . c. Accrual . 2. Determine whether each of the following is a characteristic of an accrual or a cash basis of accounting. a. Accrual . b. Cash . c. Cash . 3.
May 02, 2018 · D. Program Evaluation ͟The organization has provided a description of the framework for how each program will be evaluated. The framework should include all the elements below: ͟The evaluation methods are cost-effective for the organization ͟Quantitative and qualitative data is being collected (at Basics tier, data collection must have begun)
Silat is a combative art of self-defense and survival rooted from Matay archipelago. It was traced at thé early of Langkasuka Kingdom (2nd century CE) till thé reign of Melaka (Malaysia) Sultanate era (13th century). Silat has now evolved to become part of social culture and tradition with thé appearance of a fine physical and spiritual .
On an exceptional basis, Member States may request UNESCO to provide thé candidates with access to thé platform so they can complète thé form by themselves. Thèse requests must be addressed to esd rize unesco. or by 15 A ril 2021 UNESCO will provide thé nomineewith accessto thé platform via their émail address.
̶The leading indicator of employee engagement is based on the quality of the relationship between employee and supervisor Empower your managers! ̶Help them understand the impact on the organization ̶Share important changes, plan options, tasks, and deadlines ̶Provide key messages and talking points ̶Prepare them to answer employee questions
Dr. Sunita Bharatwal** Dr. Pawan Garga*** Abstract Customer satisfaction is derived from thè functionalities and values, a product or Service can provide. The current study aims to segregate thè dimensions of ordine Service quality and gather insights on its impact on web shopping. The trends of purchases have
Chính Văn.- Còn đức Thế tôn thì tuệ giác cực kỳ trong sạch 8: hiện hành bất nhị 9, đạt đến vô tướng 10, đứng vào chỗ đứng của các đức Thế tôn 11, thể hiện tính bình đẳng của các Ngài, đến chỗ không còn chướng ngại 12, giáo pháp không thể khuynh đảo, tâm thức không bị cản trở, cái được
Part One: Heir of Ash Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Chapter 12 Chapter 13 Chapter 14 Chapter 15 Chapter 16 Chapter 17 Chapter 18 Chapter 19 Chapter 20 Chapter 21 Chapter 22 Chapter 23 Chapter 24 Chapter 25 Chapter 26 Chapter 27 Chapter 28 Chapter 29 Chapter 30 .
TO KILL A MOCKINGBIRD. Contents Dedication Epigraph Part One Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Part Two Chapter 12 Chapter 13 Chapter 14 Chapter 15 Chapter 16 Chapter 17 Chapter 18. Chapter 19 Chapter 20 Chapter 21 Chapter 22 Chapter 23 Chapter 24 Chapter 25 Chapter 26
