Quiz 4 2.0
Gamma Company adjusts its accounts at the end of each month. The following information has been assembled in order to prepare the required adjusting entries at December 31:A one-year bank loan of $720000 at an annual interest rate of 6% had been obtained on December 1.The company's pays all employees up-to-date each Friday for a five-day workweek. Since December 31 fell on Tuesday there was a liability to employees at December 31 for two day's pay (Monday and Tuesday). Employees earn a total of $12800 per week.On December 1 rent on the office building had been paid for three months. The monthly rent is $7000.Depreciation of office equipment is based on an estimated useful life of five years. The balance in the Office Equipment account is $12360 no change has occurred in the account during the year.All fees totaling $19800 were earned during the month for clients who had paid in advance.How much depreciation expense should be recorded for December?
A) $206
In which of the following situations would the largest amount be recorded as an expense of the current year? (Assume accrual basis accounting.)
A) $4000 is paid in January for equipment with a useful life of four years.
Paddle Incorporated purchased equipment for $14760 on February 1 Year 1. The equipment has a useful life of 3 years. How much depreciation expense should Paddle recognize on its income statement for Year 1?
A) $4510
Great Kids Company began providing day care for the children of employees of a large corporation on January 15 for an agreed monthly fee of $9000. The first payment is to be received on February 15. The adjusting entry required by Great Kids Company on January 31 includes:
A) A credit to Child Care Fees Earned of $4500.
On December 31 Louis Jeweler's made an adjusting entry to record $4200 accrued interest payable on a note payable. On January 10 the note which had a balance of $20000 was repaid. The payment of $26300 included interest charges of $6300 $2100 of which were applicable to the period from January 1 through January 10. The entry to record the repayment of the loan would include:
A) A debit to Accrued Interest Payable for $4200 and a debit to Interest Expense for $2100.
Regal Real Estate which maintains its accounts on the basis of a fiscal year ending June 30 began the management of an office building on June 15 for an agreed annual fee of $4800. The first payment is due on July 15. The adjusting entry required at June 30 is:
A) A debit to Management Fees Receivable for $200 and a credit to a revenue account for $200.
Prepaid expenses are:
A) Assets.
Adjusting entries are prepared:
A) Before financial statements and after a trial balance has been prepared.
Shop supplies are expensed when:
A) Consumed.
Gordy's Corporation has seven employees. Each earns $800 per week for a five-day work week ending on Friday. This month the last day of the month falls on a Thursday. The company should make an adjusting entry:
A) Debiting Wage Expense for $4480 and crediting Wages Payable for $4480.
Omega Company adjusts its accounts at the end of each month. The following information has been assembled in order to prepare the required adjusting entries at December 31 Year 1:(1) A one-year bank loan of $720000 at an annual interest rate of 12% had been obtained on December 1 Year 1.(2) The company pays all employees up-to-date each Friday. Since December 31 Year 1 fell on Tuesday there was a liability to employees at that date for two day's pay amounting to $6800.(3) On December 1 Year 1 rent on the office building had been paid for four months. The monthly rent is $6000.(4) Depreciation of office equipment is based on an estimated useful life of six years. The balance in the Office Equipment account is $9360 no change has occurred in the account during the year.(5) Fees of $9800 were earned during the month for clients who had paid in advance.After the appropriate adjusting entry is recorded the balance in the liability account Unearned Fees will:
A) Decrease by $9800.
Under accrual accounting salaries earned by employees but not yet paid should be expensed in the period:
A) In which they are earned.
The adjusting entry to record interest that has accrued on a note payable to the bank will cause an immediate:
A) Increase in liabilities and reduction in net income.
Depreciation expense is:
A) Only an estimate.
Which of the following is the accounting principle that governs the timing of revenue recognition?
A) Realization principle
Accumulated depreciation is:
A) The depreciation expense recorded on an asset to date.
Which of the following entries causes an immediate decrease in assets and in net income?
A) The entry to record depreciation expense.
Which of the following is considered an adjusting entry?
A) The entry to record depreciation.
The entry to record depreciation is an example of an adjusting entry:
A) To apportion a recorded cost.
Which of the following is not a purpose of adjusting entries?A) To prepare the revenue and expense accounts for recording transactions of the following period.B) To apportion the proper amounts of revenue and expense to the current accounting period.C) To establish the proper amounts of assets and liabilities in the balance sheet.D) To accomplish the objective of offsetting the revenue of the period with all the expenses incurred in generating that revenue.
A) To prepare the revenue and expense accounts for recording transactions of the following period.
Which of the following would not be a proper application of the concept of materiality by Millridge Corporation?
A) Transactions involving small dollar amounts are not recorded in Millridge's accounting records.
Adjusting entries are needed whenever transactions affect the revenue or expenses of more than one accounting period.
A) True
Avalon Company paid $4400 cash for an insurance policy providing three years' protection against fire loss. This transaction could properly be recorded by a $4400 debit to Unexpired Insurance and a $4400 credit to Cash.
A) True
Every adjusting entry involves the recognition of either revenue or an expense.
A) True
Immaterial items may be accounted for in the most convenient manner without regard to other theoretical concepts.
A) True
Omission of the adjusting entry needed to accrue an expense at the end of the period would cause liabilities to be understated.
A) True
One of the purposes of adjusting entries is to convert assets to expenses.
A) True
Prepaid expenses are assets that should appear on the balance sheet.
A) True
The period of time over which the cost of an asset is allocated to depreciation expense is called its useful life.
A) True
Wages are an expense to the employer when earned rather than when paid.
A) True
If an asset was purchased on January 1 Year 1 for $156000 with an estimated life of 6 years what is the accumulated depreciation at December 31 Year 4?
B) $104000.
If an asset was purchased on January 1 Year 1 for $140000 with an estimated life of 5 years what is the accumulated depreciation at December 31 Year 4?
B) $112000
Hoffman Incorporated adjusts its books each month but closes its books at the end of the year. The company's unadjusted trial balance at March 31 is as follows:Debit:Cash $11110Accounts Receivable $9810Supplies $1490PrepaidInsurance $2760Equipment $21600Dividends $1750Salaries Expense $8750Utilities Expense $580Rent Expense $2250Total: $60100Credit:Accumulated Depreciation: Equipment $8640Unearned Service Revenue $7450Capital Stock $6150Retained Earnings $24350Service Revenue Earned $13510Total: $60100The equipment had an estimated useful life of five years. Compute the book value of the equipment at March 31 after the proper March adjustment is recorded.
B) $12600
Omega Company adjusts its accounts at the end of each month. The following information has been assembled in order to prepare the required adjusting entries at December 31 Year 1:(1) A one-year bank loan of $720000 at an annual interest rate of 12% had been obtained on December 1 Year 1.(2) The company pays all employees up-to-date each Friday. Since December 31 Year 1 fell on Tuesday there was a liability to employees at that date for two day's pay amounting to $6800.(3) On December 1 Year 1 rent on the office building had been paid for four months. The monthly rent is $6000.(4) Depreciation of office equipment is based on an estimated useful life of six years. The balance in the Office Equipment account is $9360 no change has occurred in the account during the year.(5) Fees of $9800 were earned during the month for clients who had paid in advance.By what amount will the book value of the office equipment decline after the appropriate December adjustment is recorded?
B) $130
Hoffman Incorporated adjusts its books each month but closes its books at the end of the year. The company's unadjusted trial balance at March 31 is as follows:Debit:Cash $10920Accounts Receivable $9620Supplies $1300Prepaid Insurance $3120Equipment $26000Dividends $1560Salaries Expense $7800Utilities Expense $390Rent Expense $1300Total: $62010Credit:Accumulated Depreciation: Equipment $10400Unearned Service Revenue $6500Capital Stock $5200Retained Earnings $23400Service Revenue Earned $16510Total: $64970The equipment had an estimated useful life of five years. Compute the book value of the equipment at March 31 after the proper March adjustment is recorded.
B) $15167
Omega Company adjusts its accounts at the end of each month. The following information has been assembled in order to prepare the required adjusting entries at December 31 Year 1:(1) A one-year bank loan of $756000 at an annual interest rate of 12% had been obtained on December 1 Year 1.(2) The company pays all employees up-to-date each Friday. Since December 31 Year 1 fell on Tuesday there was a liability to employees at that date for two day's pay amounting to $7400.(3) On December 1 Year 1 rent on the office building had been paid for four months. The monthly rent is $6600.(4) Depreciation of office equipment is based on an estimated useful life of six years. The balance in the Office Equipment account is $11520 no change has occurred in the account during the year.(5) Fees of $10400 were earned during the month for clients who had paid in advance.By what amount will the book value of the office equipment decline after the appropriate December adjustment is recorded?
B) $160
Hoffman Incorporatedadjusts its books each month but closes its books at the end of the year. The company's unadjusted trial balance at March 31 is as follows:Debit:Cash $11120Accounts Receivable $9820Supplies $1500Prepaid Insurance $2720Equipment $21000Dividends $1760Salaries Expense $8800Utilities Expense $590Rent Expense $2300Total: $59610Credit:Accumulated Depreciation: Equipment$8400Unearned Service Revenue $7500Capital Stock $6200Retained Earnings $24400Service Revenue Earned $13110Total: $59610According to service contracts $5010 of the Unearned Service Revenue has been earned in March. The amount of Service Revenue Earned to be reported in the March income statement is:
B) $18120.
Before any month-end adjustments are made the net income of Russell Company is $37000. However the following adjustments are necessary: office supplies used $3060 services performed for clients but not yet recorded or collected $2940 interest accrued on a note payable to bank $3540. After adjusting entries are made for the items listed above Russell Company's net income would be:
B) $33340.
Before any month-end adjustments are made the net income of Russell Company is $38000. However the following adjustments are necessary: office supplies used $3160 services performed for clients but not yet recorded or collected $3040 interest accrued on a note payable to bank $3640. After adjusting entries are made for the items listed above Russell Company's net income would be:
B) $34240.
Hoffman Incorporated adjusts its books each month but closes its books at the end of the year. The company's unadjusted trial balance at March 31 is as follows:Debit:Cash $11090Accounts Receivable $9790Supplies $1470Prepaid Insurance $2840Equipment $22800Dividends $1730Salaries Expense $8650Utilities Expense $560Rent Expense $2150Total: $61080Credit:Accumulated Depreciation: Equipment $9120Unearned Service Revenue $7350Capital Stock $6050Retained Earnings $24250Service Revenue Earned $14310Total: $61080On March 1 Hoffman paid in advance for four months' insurance. The necessary adjusting entry at March 31 includes which of the following?
B) A credit to Prepaid Insurance for $710.
Hoffman Incorporated adjusts its books each month but closes its books at the end of the year. The company's unadjusted trial balance at March 31 is as follows:Debit:Cash $10920Accounts Receivable $9620Supplies $1300Prepaid Insurance $3120Equipment $26000Dividends $1560Salaries Expense $7800Utilities Expense $390Rent Expense $1300Total: $62010Credit:Accumulated Depreciation: Equipment $10400Unearned Service Revenue $6500Capital Stock $5200Retained Earnings $23400Service Revenue Earned $16510Total: $64970On March 1 Hoffman paid in advance for four months' insurance. The necessary adjusting entry at March 31 includes which of the following?
B) A credit to Prepaid Insurance for $780.
Omega Company adjusts its accounts at the end of each month. The following information has been assembled in order to prepare the required adjusting entries at December 31 Year 1:(1) A one-year bank loan of $720000 at an annual interest rate of 12% had been obtained on December 1 Year 1.(2) The company pays all employees up-to-date each Friday. Since December 31 Year 1 fell on Tuesday there was a liability to employees at that date for two day's pay amounting to $6800.(3) On December 1 Year 1 rent on the office building had been paid for four months. The monthly rent is $6000.(4) Depreciation of office equipment is based on an estimated useful life of six years. The balance in the Office Equipment account is $9360 no change has occurred in the account during the year.(5) Fees of $9800 were earned during the month for clients who had paid in advance.The entry to record rent expense will include:
B) A credit to Prepaid Rent for $6000.
No adjusting entry should consist of:
B) A debit to an expense and a credit to revenue.
An example of a contra-asset account is:
B) Accumulated Depreciation.
Omega Company adjusts its accounts at the end of each month. The following information has been assembled in order to prepare the required adjusting entries at December 31 Year 1:(1) A one-year bank loan of $720000 at an annual interest rate of 12% had been obtained on December 1 Year 1.(2) The company pays all employees up-to-date each Friday. Since December 31 Year 1 fell on Tuesday there was a liability to employees at that date for two day's pay amounting to $6800.(3) On December 1 Year 1 rent on the office building had been paid for four months. The monthly rent is $6000.(4) Depreciation of office equipment is based on an estimated useful life of six years. The balance in the Office Equipment account is $9360 no change has occurred in the account during the year.(5) Fees of $9800 were earned during the month for clients who had paid in advance.The accrued interest should be:
B) Credited to Interest Payable.
Unearned revenue may also be called:
B) Deferred revenue.
Which of the following statements regarding depreciation is correct?
B) Depreciation is only an estimate of the decline in value of an asset.
Adjusting entries are only required when errors are made.
B) False
Adjusting entries are usually made on a daily basis.
B) False
An adjusting entry to recognize revenue that has been earned but not yet billed or collected will cause an increase in total liabilities.
B) False
Depreciation expense on equipment is considered a cash expense since the company must pay cash for the equipment.
B) False
If a depreciable asset's market value increases during the year no depreciation expense should be recorded.
B) False
Materiality is determined by the Financial Accounting Standards Board.
B) False
Recording depreciation expense is an example of an adjusting entry to accrue unpaid expenses resulting from expenses being incurred before cash is paid.
B) False
The Cash account is usually affected by adjusting entries.
B) False
The adjusting entry to record estimated income taxes in a profitable period consists of a debit to Income Tax Payable and a credit to Income Tax Expense.
B) False
The balance in the Retained Earnings account that appears on the adjusted trial balance is the same as the balance of the Retained Earnings account that is reported on the balance sheet.
B) False
The failure to record an adjusting entry for depreciation would cause assets to be overstated and net income to be understated.
B) False
The realization principle underlies the accounting practices of depreciating plant assets and amortizing the cost of unexpired insurance policies.
B) False
Unearned revenue is a liability and should be reported on the income statement.
B) False
The accrual of interest on a note payable will:
B) Increase total liabilities.
The concept of materiality:
B) Justifies ignoring the matching principle or the realization principle in certain circumstances.
An adjusting entry involving recognition of accrued revenue is necessary at the end of March in which of the following situations?
B) Midwood Consultants began working for a client on March 15 bills will be sent monthly beginning April 15.
Which of the following statements is not true regarding prepaid expenses?
B) Prepaid expenses are shown in a special section of the income statement.
The purpose of adjusting entries is to:
B) Record certain revenue and expenses that are not properly measured in the course of recording daily routine transactions.
On the adjusted trial balance retained earnings is:
B) Stated at the period-beginning amount.
During the last month of its fiscal year Echo Lake Resort provided catering services for local business. Echo Lake Resort has not yet received payment from the local business. The entry to record this event is an example of an adjusting entry:
B) To accrue an uncollected revenue.
Omega Company adjusts its accounts at the end of each month. The following information has been assembled in order to prepare the required adjusting entries at December 31 Year 1:(1) A one-year bank loan of $720000 at an annual interest rate of 12% had been obtained on December 1 Year 1.(2) The company pays all employees up-to-date each Friday. Since December 31 Year 1 fell on Tuesday there was a liability to employees at that date for two day's pay amounting to $6800.(3) On December 1 Year 1 rent on the office building had been paid for four months. The monthly rent is $6000.(4) Depreciation of office equipment is based on an estimated useful life of six years. The balance in the Office Equipment account is $9360 no change has occurred in the account during the year.(5) Fees of $9800 were earned during the month for clients who had paid in advance.Failure to make the appropriate adjustment to the Salary Expense account will
B) Understate net income for January by $6800.
Under accrual accounting fees received in advance from customers should be shown as being earned:
B) When services are performed or goods delivered.
Dolphin Company received $1500 in fees during Year 1 1/3 of which will be earned in Year 2. The rest was earned when the amount was received. The company should report which of the following amounts as income in Year 1?
C) $1000
Before making month-end adjustments net income of Cardinal Company was $113500 for March. Adjusting entries are necessary for the following items:● Depreciation for the month of March: $1800.● Rental income accrued during March tenant to pay in April: $750.● Supplies used in March: $250.● Fees earned in March that had been collected in advance: $2100.After recording these adjustments net income for March is:
C) $114300.
Before making month-end adjustments net income of Cardinal Company was $116000 for March. Adjusting entries are necessary for the following items:Depreciation for the month of March: $2300.Rental income accrued during March tenant to pay in April: $800.Supplies used in March: $100.Fees earned in March that had been collected in advance: $2600.After recording these adjustments net income for March is:
C) $117000.
On June 1 Norma Company signed a 12-month lease for warehouse space. The lease requires monthly rent of $550 with 4 months paid in advance. Norma Company records the payment by debiting Prepaid Rent $2200 and crediting Cash $2200. At the end of June what should be the balance of Norma's Prepaid Rent account?
C) $1650
Before making month-end adjustments net income of Bobwhite Company was $227000 for March. Adjusting entries are necessary for the following items:● Depreciation for the month of March: $3300.● Rental income accrued during March tenant to pay in April: $800.● Supplies used in March: $500.● Fees earned in March that had been collected in advance: $2600.After recording these adjustments net income for March is:
C) $226600.
Before making month-end adjustments net income of Bobwhite Company was $232000 for March. Adjusting entries are necessary for the following items:● Depreciation for the month of March: $4300.● Rental income accrued during March tenant to pay in April: $900.● Supplies used in March: $300.● Fees earned in March that had been collected in advance: $3600.After recording these adjustments net income for March is:
C) $231900.
An asset purchased on January 1 Year 1 for $54900 that has an estimated life of 9 years will have a book value on December 31 Year 4 of:
C) $30500.
Gamma Company adjusts its accounts at the end of each month. The following information has been assembled in order to prepare the required adjusting entries at December 31:A one-year bank loan of $720000 at an annual interest rate of 6% had been obtained on December 1.The company's pays all employees up-to-date each Friday for a five-day workweek. Since December 31 fell on Tuesday there was a liability to employees at December 31 for two day's pay (Monday and Tuesday). Employees earn a total of $12800 per week.On December 1 rent on the office building had been paid for three months. The monthly rent is $7000.Depreciation of office equipment is based on an estimated useful life of five years. The balance in the Office Equipment account is $12360 no change has occurred in the account during the year.All fees totaling $19800 were earned during the month for clients who had paid in advance.What amount of interest expense has accrued on the bank loan?
C) $3600
An asset purchased on January 1 Year 1 for $60000 that has an estimated life of 10 years will have a book value on December 31 Year 4 of:
C) $36000.
Gamma Company adjusts its accounts at the end of each month. The following information has been assembled in order to prepare the required adjusting entries at December 31:A one-year bank loan of $720000 at an annual interest rate of 6% had been obtained on December 1.The company's pays all employees up-to-date each Friday for a five-day workweek. Since December 31 fell on Tuesday there was a liability to employees at December 31 for two day's pay (Monday and Tuesday). Employees earn a total of $12800 per week.On December 1 rent on the office building had been paid for three months. The monthly rent is $7000.Depreciation of office equipment is based on an estimated useful life of five years. The balance in the Office Equipment account is $12360 no change has occurred in the account during the year.All fees totaling $19800 were earned during the month for clients who had paid in advance.How much is owed the employees for their wages?
C) $5120
Omega Company adjusts its accounts at the end of each month. The following information has been assembled in order to prepare the required adjusting entries at December 31 Year 1:(1) A one-year bank loan of $720000 at an annual interest rate of 12% had been obtained on December 1 Year 1.(2) The company pays all employees up-to-date each Friday. SinceDecember 31 Year 1 fell on Tuesday there was a liability to employees at that date for two day's pay amounting to $6800.(3) On December 1 Year 1 rent on the office building had been paid for four months. The monthly rent is $6000.(4) Depreciation of office equipment is based on an estimated useful life of six years. The balance in the Office Equipment account is $9360 no change has occurred in the account during the year.(5) Fees of $9800 were earned during the month for clients who had paid in advance.What amount of interest expense has accrued on the bank loan?
C) $7200
Before any month-end adjustments are made the net income of Bennett Company is $76000. The following adjustments are necessary: office supplies used $3160 services performed for clients but not yet recorded or collected $3640 interest accrued on note payable to bank $3040. After adjusting entries are made for the items listed above Bennett Company's net income will be:
C) $73440
Before any month-end adjustments are made the net income of Bennett Company is $76300. The following adjustments are necessary: office supplies used $3190 services performed for clients but not yet recorded or collected $3670 interest accrued on note payable to bank $3070. After adjusting entries are made for the items listed above Bennett Company's net income will be:
C) $73710.
Omega Company adjusts its accounts at the end of each month. The following information has been assembled in order to prepare the required adjusting entries at December 31 Year 1:(1) A one-year bank loan of $756000 at an annual interest rate of 12% had been obtained on December 1 Year 1.(2) The company pays all employees up-to-date each Friday. Since December 31 Year 1 fell on Tuesday there was a liability to employees at that date for two day's pay amounting to $7400.(3) On December 1 Year 1 rent on the office building had been paid for four months. The monthly rent is $6600.(4) Depreciation of office equipment is based on an estimated useful life of six years. The balance in the Office Equipment account is $11520 no change has occurred in the account during the year.(5) Fees of $10400 were earned during the month for clients who had paid in advance.What amount of interest expense has accrued on the bank loan?
C) $7560
An adjusting entry to convert an asset to expense consists of:
C) A debit to an expense and a credit to an asset account.
Colonial Systems prepares monthly financial statements. Colonial would record a prepaid expense in each of the following situations except:
C) A tenant paid Colonial Systems three months' rent in advance.
The accountant for the Grassroots Company failed to make an adjusting entry to record revenue earned but not yet billed to customers. The effect of this error is:
C) An understatement of assets net income and owners' equity.
Unearned revenue appears:
C) As a liability on the balance sheet.
The accountant for Perfect Painting forgot the following two adjustments at the end of Year 1:(a) The entry to record depreciation: $3000.(b) The entry to record the portion of fees received in advance which have now been earned: $3000. As a result of these two omissions:
C) Assets of Perfect Painting are overstated at December 31 Year 1.
Which of the following situations does not require Empire Company to record an adjusting entry at the end of January?
C) At the end of January Empire Company pays the custodian for January office cleaning services.
Which statement is true about an adjusted trial balance?
C) Balance sheet items are presented before income statement items.
Which of the following statements concerning materiality is true?
C) Immaterial items should be handled in the most expedient manner even if resulting financial statements are not completely precise.
Which statement is true about land?
C) Land should not be depreciated.
Which of the following accounting principles is concerned with offsetting revenue with the expenses incurred in producing that revenue?
C) Matching
Recently Bon Appetite Café contracted and paid for a relatively expensive advertisement in Haute Cuisine magazine. Despite the fact that the ad will appear in Haute Cuisine three months after the end of Bon Appetite Café's current fiscal year the Cafe's accountant recorded the disbursement to advertising expense. If no adjusting entry is made how will this year's financial statements of Bon Appetite Café be affected?
C) Net income will be understated and total assets will be understated
We can compare income of the current period with income of a previous period to determine whether the operating results are improving or declining:
C) Only if the accounting periods are equal in length.
Adjusting entries help achieve the goals of accrual accounting by applying which two accounting principles?
C) Realization principle and matching principle
Which of the following would not be considered an adjusting entry?
C) Wage expense 400 Cash 400
Gourmet Shop purchased cash registers on April 1 for $11520. If this asset has an estimated useful life of three years what is the book value of the cash registers on May 31?
D) $10880.
Gourmet Shop purchased cash registers on April 1 for $12000. If this asset has an estimated useful life of four years what is the book value of the cash registers on May 31?
D) $11500.
Swordfish Company earned $67000 in Year 1 and expects to receive 4/5 of the amount in Year 2 and the remainder in Year 3. How much revenue should Swordfish Company report in Year 1?
D) $67000.
Swordfish Company earned $75000 in Year 1 and expects to receive 2/3 of the amount in Year 2 and the remainder in Year 3. How much revenue should Swordfish Company report in Year 1?
D) $75000
Hoffman Incorporated adjusts its books each month but closes its books at the end of the year. The company's unadjusted trial balance at March 31 is as follows:Debit:Cash $10920Accounts Receivable $9620Supplies $1300Prepaid Insurance $3120Equipment $26000Dividends $1560Salaries Expense $7800Utilities Expense $390Rent Expense $1300Total: $62010Credit:Accumulated Depreciation: Equipment $10400Unearned Service Revenue $6500Capital Stock $5200Retained Earnings $23400Service Revenue Earned $16510Total: $64970At March 31 the amount of supplies on hand is $520. What amount is reported in the March income statement for supplies expense?
D) $780
Hoffman Incorporated adjusts its books each month but closes its books at the end of the year. The company's unadjusted trial balance at March 31 is as follows:Debit:Cash $10960Accounts Receivable $9660Supplies $1340Prepaid Insurance $3280Equipment $28200Dividends $1600Salaries Expense $8000Utilities Expense $430Rent Expense $1500Total: $64970Credit:Accumulated Depreciation: Equipment $11280Unearned Service Revenue $6700Capital Stock $5400Retained Earnings $23600Service Revenue Earned $17990Total: $64970At March 31 the amount of supplies on hand is $540. What amount is reported in the March income statement for supplies expense?
D) $800
Hoffman Incorporated adjusts its books each month but closes its books at the end of the year. The company's unadjusted trial balance at March 31 is as follows:Debit:Cash $10920Accounts Receivable $9620Supplies $1300Prepaid Insurance $3120Equipment $26000Dividends $1560Salaries Expense $7800Utilities Expense $390Rent Expense $1300Total: $62010Credit:Accumulated Depreciation: Equipment $10400Unearned Service Revenue $6500Capital Stock $5200Retained Earnings $23400Service Revenue Earned $16510Total: $64970Employees are owed $750 for services since the last payday in March to be paid the first week in April. The amount to be reported in the March income statement for salaries expense is:
D) $8550
Accumulated Depreciation is:
D) A contra-asset account.
Interest that has accrued during the accounting period on a note payable requires an adjusting entry consisting of:
D) A debit to Interest Expense and a credit to Interest Payable.
Which of the following is not considered a basic type of adjusting entry?
D) An entry to convert an asset to a liability.
Which of the following is not considered an end-of-period adjusting entry?
D) An entry to record repayment of a bank loan and to recognize related interest expense.
The balance of an unearned revenue account:
D) Appears in the liability section of the balance sheet.
Adjusting entries:
D) Are needed whenever revenue transactions affect more than one period.
In which of the following situations would Daystar Company record unearned revenue in May?
D) Daystar Company receives payment in May for work to be performed in June and July.
Videobusters Incorporated offered books of video rental coupons to its patrons at $40 per book. Each book contained a certain number of coupons for video rentals. During the current period 500 books were sold for $20000 and this amount was credited to Unearned Rental Revenue. At the end of the period it was determined that $15000 worth of coupons had been used by customers to rent videos. The appropriate adjusting entry at the end of the period would be:
D) Debit Unearned Rental Revenue $15000 and credit Rental Revenue $15000.
Videobusters Incorporated offered books of video rental coupons to its patrons at $48 per book. Each book contained a certain number of coupons for video rentals. During the current period 580 books were sold for $27840 and this amount was credited to Unearned Rental Revenue. At the end of the period it was determined that $19000 worth of coupons had been used by customers to rent videos. The appropriate adjusting entry at the end of the period would be:
D) Debit Unearned Rental Revenue $19000 and credit Rental Revenue $19000.
The concept of materiality:
D) Is measured as an item significant enough to influence the decisions of users of financial statements.
Which of the following is not an example of an adjusting entry?
D) The entry to pay outstanding bills.
Adjusting entries are needed:
D) Whenever transactions affect the revenue or expenses of more than one accounting period.
The adjusted trial balance may be used in place of the income statement.
False
