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Exam 3: The Adjusting Process

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Question 1

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Record journal entries for the following transactions.​​ (a) On December 1, $18,000 was received for a service contract to be performed from December 1 through April 30.​ (b) Assuming the work is performed evenly throughout the contract period, prepare the adjusting journal entry on December 31.

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Question 2

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Gizmo Company purchased a one-year insurance policy on October 1 for $1,800. The adjusting entry on December 31 would be:​

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$1,800/12 ...

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Question 3

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The balance in the office supplies account on January 1 was $7,000, supplies purchased during January were $3,000, and the supplies on hand on January 31 were $2,000. The amount to be used for the appropriate adjusting entry is

On December 15, Great Designs Company hired an independent contractor for a project. The contractor completed the project on December 29 and submitted an invoice for $2,425 which was due on January 15. The amount was duly paid on January 15.​ (a) Prepare the journal entry or entries necessary to record these transactions. (b) Explain why you prepared this/these journal entries.

A contra asset account for Land will normally appear on the balance sheet.

Match the type of account (a through e) with the business transactions that follow. -Paid for a six-month magazine subscription.

On November 1, clients of Great Designs Company prepaid $4,250 for services to be provided in the future at a rate of $85 per hour.​ (a) Journalize the receipt of cash. (b) As of November 30, Great Designs shows that 15 hours of services have been provided on this agreement. Prepare the necessary journal entry. (c) Determine the total unearned fees in hours and dollars at November 30.

Depreciation Expense is reported on the balance sheet as an addition to the related asset.

The financial statements are prepared from the unadjusted trial balance.

The systematic allocation of land's cost to expense is called depreciation.

What effect will the following adjusting journal entry have on the accounting records? $\begin{array} { | c | r | r | } \hline \text { Depreciation Expense } & 2,150 & \\\hline \text { Accumulated Depreciation } & & 2,150 \\\hline\end{array}$

The difference between deferred revenue and accrued revenue is that accrued revenue has been recorded and needsadjusting and deferred revenue has never been recorded.

The unearned rent account has a balance of $72,000. If $18,000 of the $72,000 is unearned at the end of the accounting period, the amount of the adjusting entry is

What effect will this adjusting journal entry have on the accounting records? $\begin{array} { | c | r | r | } \hline \text { Supplies Expense } & 760 & \\\hline \text { Supplies } & & 760 \\\hline\end{array}$

Depreciation on an office building is $2,800. The adjusting entry on December 31 would be: $\begin{array} { | c | c | c | c | c | } \hline \text { Date } & \text { Description } & \text { Post. Ref. } & \text { Debit } & \text { Credit } \\\hline & & & & \\\hline & & & & \\\hline\end{array}$

DogMart Company records depreciation for equipment. Depreciation for the period ending December 31 is $1,400 for office equipment and $2,650 for production equipment. Prepare the two entries to record the depreciation.

Match the type of account (a through e) with the business transactions that follow. -Retainer fee received from a client for future legal representation.

A company receives $6,500 for two season tickets sold on September 1. If $2,500 is earned by December 31, the adjusting entry made at that time is a debit to Cash of $2,500, and a credit to Ticket Revenue of $2,500.

Gracie Company made a prepaid rent payment of $2,800 on January 1. The company's monthly rent is $700. The amount of prepaid rent that would appear on the January 31 balance sheet after adjustment is

The account type and normal balance of Unearned Revenue would be