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Exam 3: The Adjusting Process

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Question 21

Essay

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The estimated amount of depreciation on equipment for the current year is $5,300. Journalize the adjusting entry to record the depreciation.

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Question 22

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The net income reported on the income statement is $58,000. However, adjusting entries have not been made at the end of the period for supplies expense of $2,200 and accrued salaries of $1,300. Net income, as corrected, is

A) $56,700
B) $58,000
C) $55,800
D) $54,500

E) A) and B)
F) B) and D)

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Question 23

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

What effect will this adjustment have on the accounting records?

For each of the following, journalize the necessary adjusting entry:

Prior to the adjusting process, accrued revenue has

The revenue recognition concept states that revenue should be recorded in the same period as the cash is received.

If the debit portion of an adjusting entry is to an asset account, then the credit portion must be to a liability account.

Data for an adjusting entry described as "accrued wages, $2,020" means to debit

The Accumulated Depreciation's account balance is the sum of the depreciation expense recorded in past periods.

The following adjusting journal entry found in the journal is missing an explanation. Select the best explanation for the entry.

For the year ending June 30, Island Clinical Services mistakenly omitted adjusting entries for (1) $1,500 of supplies that were used, (2) unearned revenue of $4,200 that was earned, and (3) insurance of $5,000 that expired. What is the combined effect of these errors on (a) revenues, (b) expenses, and (c) net income for the year ending June 30?

The matching concept

On January 1st, Great Designs Company had a debit balance of $1,450 in the Office Supplies account. During the month, Great Designs purchased $115 and $160 of office supplies and journalized them to the Office Supplies asset account upon purchasing. On January 31st, an inspection of the office supplies cabinet shows that only $350 of Office Supplies remains in the locker. Prepare the January 31st adjusting entry for Office Supplies.

On January 2nd, Dog Mart prepaid $30,000 rent for the year and recorded the prepayment in an asset account. Prepare the January 31st adjusting entry for rent expense.

A company pays an employee $3,000 for a five day work week, Monday - Friday. The adjusting entry on December 31, which is a Wednesday, is debit Wages Expense, $1,800 and credit Wages Payable, $1,800.

What is the purpose of an adjusted trial balance? What type(s) of error does it detect? What type(s) of error does it not detect?

At year-end, the balance in the prepaid insurance account, prior to any adjustments, is $6,000. The amount of the journal entry required to record insurance expense will be $4,000 if the amount of unexpired insurance applicable to future periods is $2,000.

The Supplies account had a beginning balance of $1,750. Supplies purchased during the period totaled $3,500. At the end of the period before adjustment, $350 of supplies were on hand. Prepare the adjusting entry for supplies.

Generally accepted accounting principles requires that companies use the ____ of accounting.