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Exam 3: Adjusting Accounts for Financial Statements

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Question 51

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If a company reporting on a calendar year basis, paid $18,000 cash on January 1 for one year of rent in advance and adjusting entries are made at the end of each month, the balance remaining in Prepaid Rent on December 1 of that year should be $1,500. $18,000 * 1/12 = $1,500

A) True
B) False

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Question 52

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If the January 1 balance in the Supplies account for a company was $520, the company purchased an additional $380 of supplies during the month, and a physical count of the supplies indicates that $235 of supplies is on hand at the end of January, the adjusting entry on January 31 for supplies should be:

A)
B)
C)
D)
E)

F) A) and C)
G) A) and B)

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Question 53

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Unearned revenue is reported in the financial statements as:

Andrew Inc.'s net income was $280,000; its total assets were $1,050,000; and its net sales were $3,500,000. Calculate the company's profit margin ratio.

A company made no adjusting entry for accrued and unpaid employee wages of $28,000 on December 31. This oversight would:

The cash basis of accounting commonly increases the comparability of financial statements from period to period.

Flagg, Inc. records adjusting entries at its December 31 year end. At December 31, employees had earned $12,000 of unpaid and unrecorded salaries. The next payday is January 3, at which time $30,000 will be paid. Prepare the January 1 journal entry to reverse the effect of the December 31 salary expense accrual.

Accrued revenues at the end of one accounting period are expected to result in cash collections in a future period.

Which of the following is the usual final step in the accounting cycle?

On October 1, Goodwell Company rented warehouse space to a tenant for $2,500 per month and received $12,500 for five months' rent in advance on that date. The collection was credited to the Unearned Rent account. The company's annual accounting period ends on December 31. The Rent Revenue account balance at the end of December, after adjustment, should be:

The calendar year-end adjusted trial balance for Blessinger Co., Inc. follows: Required: (a) Prepare a classified year-end balance sheet. (Note: A $9,000 installment on the long-term note payable is due within one year.)

Identify the types of adjusting entries and explain the purpose of each type.

Which of the following accounts would be included in a post-closing trial balance?

A broad principle that requires identifying the activities of a business with specific time periods such as months, quarters, or years is the:

An unadjusted trial balance is a list of accounts and balances prepared before adjustments are recorded.

Using the information given below, prepare a balance sheet for Rapid Car Services, Inc. from the adjusted trial balance. The stockholders did not make any additional investments in the company during the year.

The adjusted trial balance must be prepared before the adjusting entries are made.

Permanent accounts include all of the following except:

A _____________ account is an account linked with another account, having an opposite normal balance, and reported as a subtraction from that other account's balance.

Trapper Company Inc.'s unadjusted and adjusted trial balances on December 31 of the current year are as follows: Present the four adjusting journal entries that were recorded by Trapper Company.