Adjusting Entries

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QUIZ
CHAPTER 3
ACTG 500

BE 161

Prepare adjusting entries for the following transactions. Omit explanations.

1.Depreciation on equipment is $800 for the accounting period. 2.There was no beginning balance of supplies and purchased $500 of office supplies during the period. At the end of the period $80 of supplies were on hand. 3.Prepaid rent had a $1,000 normal balance prior to adjustment. By year end $600 was unexpired.

Solution 161

|1 |Depreciation Expense |800 | | | | Accumulated Depreciation - Equipment | |800 | | |To record depreciation on equipment | | | |2 |Supplies Expense (500-80) |420 | | | | Supplies | |420 | | |To record supplies expense | | | |3 |Rent Expense (1000-600) |400 | | | | Prepaid rent expense | |400 | | |To record rent expense | | |

Be. 163

On January 1, Biddle & Biddle, CPAs received a $9,000 cash retainer for legal services to be rendered ratably over the next 3 months. The full amount was credited to the liability account Unearned Revenue. Assuming that the revenue is earned ratably over the 3-month period, what adjusting journal entry should be made at January 31?

Solution 163

1.

|Jan 31 |Unread Service Revenue (9,000 X 1/3) |3,000 | | | | Service Revenue | |3,000 | | |To record the earning of service revenue that was collected in | | | | |advance | | |

BE 172

River Ridge Music School borrowed $20,000 from the bank signing a 10%, 6-month note on November 1. Principal and interest are payable to the bank on May 1. If the company prepares monthly financial statements, what adjusting entry should the company make at November 30 with regard to the note (round answer to the nearest dollar)?

Solution 172

|Nov 30 |Interest Expense (20,000 X 10% X 1/12) |167 | | | | Interest Payable | |167 |

212.Match the items below by entering the appropriate code letter in the space provided.

A.Time period assumptionF.Accrued revenues
B.Fiscal yearG.Depreciation
C.Revenue recognition principleH.Accumulated depreciation
D.Prepaid expensesI.Accrued expenses
E.Matching principleJ.Book value

B1.A twelve month accounting period
D2.Expenses paid before they are incurred
J3.Cost less accumulated depreciation
A4.Divides the economic life of a business into artificial time periods E5.Efforts are related to accomplishments
H6.A contra asset account
C7.Recognition of revenue when it is recorded when earned F8.Revenues earned but not yet received
I9.Expenses incurred but not yet paid
G10.A cost allocation process

BE 173

The...
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