ch 3 accounting smart book

Unearned revenue would be debited for $700. Service revenue would be credited for $700.

$1,000 of cash was received in advance of performing services. By the end of the period, $300 had not yet been earned. (The Unearned revenue account was increased at the time of the initial cash receipt.) Demonstrate the required adjusting journal entry by selecting from the choices below. (Check all that apply.)

$100

A business has a $10,000 loan from a bank at 8% annual interest. Calculate the amount of interest to accrue if the loan has been outstanding for 45 days. Use a 360 day year.

$200

A business has a $5,000 loan from a bank at 16% annual interest. Calculate the amount of interest to accrue if the loan has been outstanding for 90 days. Use a 360 day year.

expense credit payable

A company borrowed $10,000 from the bank at 5% interest. The loan has been outstanding for 45 days. Demonstrate the required adjusting entry for this company by completing the following sentence. The required adjusting entry would be to debit the Interest _______________________ (expense/payable/receivable) account and _______________________ (debit/credit) the Interest ____________________ (expense/payable/receivable) account.

Debit Interest expense for $30.

A company borrowed $4,000 from the bank at an interest rate of 9%. By the end of the accounting period, the loan had been outstanding for 30 days. Demonstrate the required adjusting entry by choosing the correct statement below.

revenues

Accrued _______________ are earned in a period that are both unrecorded and not yet received in cash.

a list of accounts and balances after adjusting entries have been recorded and posted

An adjusted trial balance is:

Debit Unearned revenues for $400.

An advance payment of $1,000 for services was received on December 1 and was recorded as a liability. By the end of the year, $400 had been earned. Demonstrate what the correct adjusting entry should include by choosing the correct statement below.

Service revenue would be credited for $400. Accounts receivable will be credited for $500. Cash will be debited for $900.

At the end of the previous year, a customer owed Chocolates R US $500. On January 31 of the current year, the customer paid $900 total, which included the $500 owed plus $400 owed for the current month of January. What would be the journal entry on January 31 that reflects this? (Check all that apply.)

Accounts receivable will be credited for $400. Cash will be debited for $600. Service revenue would be credited for $200.

At the end of the previous year, a customer owed Days Company $400. On February 1 of the current year, the customer paid $600 total, which included the $400 owed plus $200 owed through February 1st. The journal entry on January 31 is? (Check all that apply.)

Debit Salaries expense for $500.

By the end of the accounting period, employees have earned salaries of $500, but they will not be paid until the following pay period. Which of the following is the proper adjusting entry?

expense credit payable

By the end of the accounting period, employees have earned salaries of $650, but they will not be paid until the following pay period. Demonstrate the required adjusting entry by completing the following sentence. The required adjusting entry would be to debit the Salaries ________________ (expense/payable) account and _______________________ (debit/credit) the Salaries ______________________ (expense/payable/unearned) account.

Six months of rent were paid in advance. Supplies were purchased at the beginning of the year, but not all were used. Equipment was purchased in the middle of the year. An advance payment was received from a customer earlier in the month, but only partially earned by the end of the month. a 24-month insurance policy was prepaid

Cash will be debited for $600. Service revenue would be credited for $200. Accounts receivable will be credited for $400.

Debit accounts receivable and credit services revenue

Chimney Sweeps provided chimney cleaning services to several clients during the month of February. Chimney's customers have not yet been billed. Chimney's customers owe $2,000 to Chimney. How will Chimney Sweeps record this transaction?

Debit Depreciation expense; credit Accumulated depreciation.

Choose the statement below that demonstrates the correct adjusting entry to recognize depreciation expense on a building.

It reports amounts owed to employees and is a liability.

Define the Salaries payable account by selecting the appropriate statement below.

Equipment was purchased in the middle of the year. a 24-month insurance policy was prepaid An advance payment was received from a customer earlier in the month, but only partially earned by the end of the month. Six months of rent were paid in advance. Supplies were purchased at the beginning of the year, but not all were used.

Determine which of the following transactions may require adjustments. (Check all that apply.)

The adjusted trial balance is prepared after adjusting entries have been recorded and posted.

Explain the difference between the unadjusted and the adjusted trial balance.

They are also called deferred revenues. They refer to cash received in advance of performing a service or product. They are a liability. They are reported on a balance sheet.

Explain what unearned revenues are by selecting the statements below which are correct. (Check all that apply.)

Examples of accrued expenses are wages expense and interest expense. They are reported on an income statement. They refer to costs that are incurred in a period, but are both unpaid and unrecorded. Adjustments involve increasing both an expense and a liability account.

Explain your understanding of what an accrued expense is by selecting the statements below which are correct. (Check all that apply.)

Debit Interest receivable for $600.

For the current year, Bubbles Office Supply had earned $600 of interest on investments. As of December 31, none of this interest had been received or recorded. Demonstrate the required half of the adjusting entry by choosing the correct statement below.

Blank 1: interest receivable Blank 2: credit Blank 3: interest revenue

For the current year, a business has earned (but not recorded or received) $200 of interest from investments. Demonstrate the required adjusting entry by completing the following sentence. The required adjusting entry would be to debit the _________________ (Unearned revenue/Accounts receivable/Cash/Interest receivable) account and __________________ (debit/credit) the ______________ (Cash/Accounts receivable/Interest revenue/Interest receivable) account.

Unearned revenue; Supplies; Prepaid rent

Identify which group of accounts may require adjustments at the end of the accounting period.

Blank 1: capital Blank 2: withdrawals

Illustrate your understanding of how to use the adjusted trial balance to prepare a statement of owner's equity by completing the following sentence. In order to prepare the statement of owner's equity, the Owner _____________(Capital, Cash) account balance as well as any debit balance in the _______________(Withdrawals, Supplies) account is transferred from the adjusted trial balance and is used along with the reported net income (loss) from the Income statement.

Blank 1: revenues Blank 2: expenses Blank 3: debit

Illustrate your understanding of how to use the adjusted trial balance to prepare an income statement by completing the following sentence. In order to prepare an income statement using the account balances on an adjusted trial balance, all of the _______________(revenues/liabilities) and their credit balances are transferred to the income statement as well as all of the ________________ (expenses/assets) and their ______________ (debit/credit) balances.

Blank 1: assets Blank 2: liabilities Blank 3: credit

Illustrate your understanding of how to use the adjusted trial balance to prepare the balance sheet by completing the following sentence. In order to prepare a balance sheet using the account balances on an adjusted trial balance, all of the ______________ (expenses/assets) and their debit balances are transferred to the balance sheet as well as all of the _____________ (liabilities/revenues) and their ______________ (debit/credit) balances.

income statement statement of owners equity balance sheet statement of cash flows

List the order in which financial statements are prepared.

Salaries payable will be debited for $500. Salaries expense would be debited for $3,500. Cash would be credited for $4,000.

McDarrel's records $500 of accrued salaries on December 31. Three days later, on January 3, total salaries of $4,000 (including the $500 accrued at year end) are paid. Demonstrate the required journal entry on January 3 by selecting from the choices below. (Check all that apply.)

Blank 1: Accounts receivable Blank 2: credit Blank 3: Service revenue

On December 27, a business completed a $400 service that had not yet been billed or recorded as of December 31. Demonstrate the required adjusting entry of the business by completing the following sentence. The required adjusting entry would be to debit the _____________________ (Unearned revenue/Accounts receivable/Cash/Service revenue) account and _______________ (debit/credit) the ________________ (Unearned revenue/Accounts receivable/Cash/Service revenue) account.

Debit Accounts receivable for $600.

On December 28, I. M. Greasy, Catering completed $600 of catering services. As of December 31, the customer had not been billed nor had the transaction been recorded. Demonstrate the required adjusting entry by choosing the correct statement below.

Income statement, statement of owner's equity, balance sheet, statement of cash flows

Recall the order in which financial statements are prepared.

Financial statements are prepared more easily using the adjusted trial balance than with the general ledger. The adjusted trial balance includes all accounts and balances appearing in financial statements. The ending Owner, Capital account balance on the balance sheet is transferred from the statement of owner's equity. The income statement is the first financial statement prepared after preparing the adjusted trial balance.

Review the following statements and determine which is (are) correct regarding an adjusted trial balance and how it is used In preparing financial statements. (Check all that apply.)

Debit to Salaries Payable for $500; Debit to Salaries Expense for $2,000

Sheldon Company had $500 for one day of accrued salaries on December 31 of the prior year. On January 4 of the current year, total salaries for the five-day week are paid. The journal entry to record the payment of salaries on January 4 includes:

1. prepare an unadjusted trial balance 2. journalize and post adjusting entries 3. prepare an adjusted trial balance 4. prepare financial statements

Show your understanding of the steps involved in adjusting entries by placing the following steps in the correct order of preparation.

debit accounts receivable credit services revenue

StoryBook Company provided services to several customers during the month of December. These services have not yet been paid by the customers. StoryBook should record the following adjusting entry at the end of December:

Cash will be debited for $600. Service revenue would be credited for $200. Accounts receivable will be credited for $400.

The adjusted trial balance is a list of accounts and their balances after adjusting entries have been posted. The adjusted trial balance generally has more accounts listed than the unadjusted trial balance. The adjusted trial balance is used to prepare financial statements.

amount owed x interest rate x fraction of the year since last payment

The formula for figuring interest expense is:

Principal amount owed Annual interest rate Fraction of year since last payment

What is needed in order to figure interest expense? (Check all that apply.)

The adjusted trial balance is a list of accounts and their balances after adjusting entries have been posted. The adjusted trial balance generally has more accounts listed than the unadjusted trial balance. The adjusted trial balance is used to prepare financial statements.

What is the difference between an adjusted trial balance and an unadjusted trial balance? (Check all that apply.)

Wages expense, Interest expense

Which of the accounts below are considered accrued expenses?

It is a liability account. It is increased with a credit. It reports amounts owed to employees. It is reported on the balance sheet.

Which of the following describe the Salaries payable account? (Check all that apply.)

The adjustment causes an increase in an asset account and an increase in a revenue account. They refer to earnings which have been earned but not yet billed. They refer to revenues that are earned in a period, but have not been received and are unrecorded. Accounts receivable is usually increased when accruing revenues.

Which of the following describes accrued revenue? (Check all that apply)