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Exam 3: The Adjusting Process

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Question 71

True/False

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A company realizes that the last two days' revenue for the month was billed but not recorded.The adjusting entry on December 31 is a debit to Accounts Receivable and a credit to Fees Earned.

A) True
B) False

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Question 72

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The prepaid insurance account had a beginning balance of $6,600 and was debited for $2,300 for premiums paid during the year.Journalize the adjusting entry required at the end of the year,assuming the amount of unexpired insurance related to future periods is $4,100.

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$6,600 + ...

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Question 73

Multiple Choice

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The adjusting entry for gym memberships earned that were previously recorded in the unearned gym memberships account is

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

On December 31,a business estimates depreciation on equipment used during the first year of operations to be $2,900.(a)Journalize the adjusting entry required on December 31.(b)If the adjusting entry in (a)were omitted,which items would be erroneously stated on (1)the income statement for the year and (2)the balance sheet as of December 31?

Jordon James started JJJ Consulting on January 1.The following are the account balances at the end of the first month of business,before adjusting entries were recorded: ​ Adjustment data: Supplies on hand at the end of the month,$200 Unbilled consulting revenue,$700 Rent expense for the month,$1,000 Depreciation on equipment,$90 (a)Prepare the required adjusting entries,adding accounts as needed. (b)Prepare an adjusted trial balance for JJJ Consulting as of January 31. ​

On March 1,a business paid $3,600 for a twelve-month liability insurance policy.On April 1,the business entered into a two-year rental contract for equipment at a total cost of $18,000.Determine the following amounts: ​ (a)insurance expense for the month of March (b)balance in prepaid insurance as of March 31 (c)equipment rent expense for the month of April (d)balance in prepaid equipment rental as of April 30

Prior to the adjusting process,accrued expenses have

Depreciation on equipment for the year is $6,300. (a)Record the journal entry if the company prepares adjustments once a year. (b)Record the journal entry if the company prepares adjustments on a monthly basis.

The unearned rent account has a balance of $72,000.If $18,000 of the $72,000 is unearned at the end of the accounting period,the amount of the adjusting entry is

The following adjusting journal entry does not include an explanation.Select the best explanation for the entry.

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

The adjusted trial balance verifies that total debits equals total credits before the adjusting entries are prepared.

The net book value of a fixed asset is determined by the original cost

The entry to adjust the accounts for salaries accrued at the end of the accounting period is

Unearned revenue is a liability.

Accruals are needed when an unrecorded expense has been incurred or an unrecorded revenue has been earned.

On January 1,Power House Co.prepaid the annual rent of $10,140.Prepare the journal entry to record this transaction.

An example of deferred revenue is Unearned Rent.

What effect will this adjusting journal entry have on the accounting records?