chapter 3 aact

On the worksheet, Accounts Receivable has a debit balance of $15,000 on the Unadjusted Trial Balance. In the Adjustments there is a debit of $3,000. What is the amount for Accounts Receivable in the Adjusted Trial Balance?

$18,000

On the worksheet, Accounts Receivable has a debit balance of $15,000 on the Unadjusted Trial Balance. In the Adjustments there is a debit of $3,000. What is the amount for Accounts Receivable in the Adjusted Trial Balance?

18,000 When you have a debit balance and a debit adjustment, you add the amounts together (15,000 + 3,000 = $18,000) for the Adjusted Trial Balance.

On the worksheet, the Office Supplies account has a debit balance of $9,000 on the Unadjusted Trial Balance. In the Adjustments there is a credit of $2,000. What is the amount for Office Supplies on the Adjusted Trial Balance?

7,000 When you have a debit balance and a credit adjustment, you subtract the amounts (9,000 - 2,000 = $7,000) for the Adjusted Trial Balance. previous

If a journal entry and posting for the use of office supplies during the year is accidently omitted, what would be the impact on the financial statements?

Net Income would be overstated (Expenses understated) and Balance Sheet assets would be overstated.

f a journal entry and posting for Salaries Expense that incurred during this year but will be paid until next year is accidentally omitted, what would be the impact on the financial statements?

Net Income would be overstated (Expenses understated) and Balance Sheet liabilities would be understated. By accidently omitting an adjusting entry for salaries incurred but not paid, you would be omitting a debit to Salaries Expense (which if omitted Net Income would be overstated and expenses would be understated) and you would be omitting a credit to Salaries Payable (which if omitted the Balance Sheet liabilities would be understated).

Which of the following is an example of an accrued expense adjusting entry?

Recording the amount of Salaries Expense for employees that is not paid yet. Accrued expenses are those expenses that have occurred, but have not been paid or recorded.

mith Company had $1,200 in office supplies at the beginning of the fiscal year. At the end of the fiscal year, Smith Company did an inventory of the office supplies and determined that $400 of supplies remained in the supply room unused. What is the journal entry to adjust for the use of supplies at the end of the fiscal year?

Supplies Expense 400 Office Supplies 400 To determine the amount of adjustment, you need to determine the amount of supplies that were used during the period. From the $1,200 worth of supplies at the beginning of the year, subtract the amount of supplies that are still left at the end of the year to get supplies used ($1,200 - $400 = $800 supplies used). Debit Supplies Expense and credit Supplies for this amount

When accounts have normal balances, which of the following accounts does not have a credit balance on the Adjusted Trial balance?

cash. Assets, Expenses, and Drawing would have normal debit balances on the Adjusted Trial Balance. Liabilities, Capital, and Revenues would have normal credit balances on the Adjusted Trial Balance. Cash is an asset and would have a debit balance, so it is the only account listed that would not have a credit balance.

On the worksheet, the Service Revenue account has a credit balance of $20,000 on the Unadjusted Trial Balance. In the Adjustments there is a credit of $2,000. What is the amount for Service Revenue in the Adjusted Trial Balance?

$22,000

Thompson Company had $1,000 in office supplies at the beginning of the fiscal year. At the end of the fiscal year, Thompson Company did an inventory of the office supplies and determined that $300 of supplies remained in the supply room unused. What is the amount of Supplies Expense at the end of the fiscal year?

700 To determine the amount of adjustment, you need to determine the amount of supplies that were used during the period. From the $1,000 worth of supplies at the beginning of the year, subtract the amount of supplies that are still left at the end of the year to get supplies used ($1,000 - $300 = $700 supplies used). Debit Supplies Expense and credit Supplies for this amount.

Jones Company received $2,200 in cash during March for Service Revenue for a job that will be completed in May. This job would be completed before the end of the year when the financials are prepared. Since it is short lived and will be earned during this accounting period, Jones Company decided to record it as revenue instead of a liability at the time the cash was received in March. The journal entry to record this transaction when we received the cash in March would be:

Date Accounts Debit Credit Cash 2,200 Service Revenue 2,200 When receiving cash in advanced for future revenues, but the revenues will be earned within the same accounting period, you can record the transaction as a credit to Service Revenue at the time the cash is received instead of as a liability (unearned).

Software Solutions was hired by Jones Company on December 1 to install and updated software. The total entire amount of $1,800 in revenues is to be paid to us by Jones Company when the job is completed the following January 31. As of December 31, we have completed one half of the software installation and updates. On December 31, Software Solutions makes the following entry to adjust for the revenues earned during December:

Date Accounts Debit Credit Dec. 31 Accounts Receivable 900 Service Revenue Only half of the revenue has actually been earned but we do not get any cash payment until it is completed on January 31. To make sure that revenues that have been earned are reflected on the company's current financial statements, we record half of the total ($900) as a debit to Accounts Receivable and a credit to Service Revenue.

Assume the weekly payroll of the Abbott Company is $5,000. December 31, the end of the year, falls on a Wednesday and Abbott will pay its employee on Friday for the full week. What adjusting entry will Abbott make on Wednesday, December 31 (Use five days as a full work week)?

Dec. 31 Salaries Expense 3,000 Salaries Payable 3,000 Salaries earned are $1,000 per day ($5,000 / 5 day work week = $1,000 per day). If December 31 is on a Wednesday, then three days worth of salaries are an expense as of that date, but not paid yet. Therefore, three days worth of salaries, which is $3,000 (3 days * $1,000 = $3,000), needs to be recorded as a Salaries Expense (debit) and Salaries Payable (credit) on December 31.

If a journal entry and posting for the use of one month of rent from the prepaid rent account during the year is accidently omitted, what would be the impact on the financial statements?

Net Income would be overstated (Expenses understated) and Balance Sheet assets would be overstated. y accidently omitting an adjusting entry for the use of the one month of rent from the prepaid rent account, you would be omitting a debit to Rent Expense (which if omitted Net Income would be overstated and Expenses would be understated) and you would be omitting a credit to Prepaid Rent (which if omitted the Balance Sheet Assets would be overstated).

Uptown Theatre has customers who prepay a total of $1,000 for season tickets to attend five upcoming shows. Uptown Dinner Theatre collects the $1,000 in advance before the shows are performed. After three shows are performed, what should Uptown Theatre report on its income statement assuming it used the accrual basis accounting method?

Service Revenue of $600

ones Company purchased $800 in office supplies with cash this year but it will be used up before the end of the year when the financials are prepared. Since it is short lived and will be used up during this accounting period, Jones Company decided to record it as an expense instead of an asset at the time of purchase. The journal entry to record this transaction when Jones Company buys the office supplies would be:

Supplies Expense 800 Cash 800

The purpose of adjusting entries is to ________

update the account balances at the end of each period to match revenues and expenses to the appropriate period. The purpose of adjusting entries is to update accounts to reflect the correct balances at the end of each period by matching revenues and expenses to the correct periods.