Chapter 3 Quiz

On July 1, a company paid the $2,640 premium on a one-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the current year ended December 31?

$2,640

On January 1, Eastern College received $1,370,000 from its students for the spring semester that it recorded in Unearned Tuition and Fees. The term spans four months beginning on January 2 and the college spreads the revenue evenly over the months of the term. What amount of tuition revenue should the college recognize on February 28? Assume the college prepares monthly financial statements.

$685,000

f Regent Tax Services' office supplies account balance on March 1 was $1,950, the company purchased $1,000 of supplies during the month, and a physical count of supplies on hand at the end of March indicated $2,250 unused, what is the amount of the adjusting entry for office supplies on March 31?

$700

On July 1 Plum Co. paid $9,400 cash for management services to be performed over a two-year period. Plum follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. On July 1 Plum should record:

A debit to a prepaid expense and a credit to Cash for $9,400.

When closing entry are made:

All temporary accounts are closed but permanent accounts are not closed.

Tara Westmont, the stockholder of Tiptoe Shoes, Inc., had annual revenues of $191,000, expenses of $106,700, The company paid $20,400 cash in dividends to the owner (sole stockholder). The retained earnings account before closing had a balance of $303,000. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is:

Debit Income Summary $84,300, credit Retained Earnings $84,300

What is the proper adjusting entry at December 31, the end of the accounting period, if the balance in the prepaid insurance account is $9,450 before adjustment, and the unexpired amount per analysis of policies is, $4,100?

Debit Insurance Expense, $5,350; credit Prepaid Insurance, $5,350

Prior to recording adjusting entries, the Office Supplies account had a $368 debit balance. A physical count of the supplies showed $110 of unused supplies available. The required adjusting entry is:

Debit Office Supplies Expense $258 and credit Office Supplies $258.

K. Canopy is the sole stockholder of Canopy Services, Inc. The company paid $6,500 cash in dividends to Canopy. The entry to close the dividends account at the end of the year is:

Debit Retained Earnings $6,500; credit Dividends $6,500

A company pays each of its two office employees each Friday at the rate of $150 per day for a five-day week that begins on Monday. If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the month-end adjusting entry to record the salaries earned but unpaid is:

Debit Salaries Expense $600 and credit Salaries Payable $600.

Which of the following accounts showing a balance on the post-closing trial balance indicate an error?

Depreciation Expense-Office Equipment.

The closing process is necessary in order to:

Ensure that net income or net loss and dividends for the period are closed into the retained earnings account.

The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the retained earnings account is the:

Income summary account

Which of the following is classified as current assets?

Office supplies

A classified balance sheet:

Organizes assets and liabilities into important subgroups that provide more information.

Assets, liabilities, and equity accounts are not closed; these accounts are called:

Permanent accounts

The trial balance prepared after all closing entries have been journalized and posted is called the:

Post closing trial balance

Temporary accounts include all of the following except:

Prepaid Rent

Revenues, expenses, and dividend accounts, which are closed at the end of each accounting period are:

Temporary Accounts

On April 1, Griffith Publishing Company received $29,880 from Santa Fe, Inc. for 36-month subscriptions to several different magazines. The company credited Unearned Fees for the amount received and the subscriptions started immediately. What is the adjusting entry that should be recorded by Griffith Publishing Company on December 31 of the first year?

debit Unearned Fees, $7,470; credit Fees Earned, $7,470.