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Exam 5: Adjustments and the Worksheet

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Question 41

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Read the description of following adjustments that are required at the end of the accounting period for AAA Appliance Repair Services. Record the necessary adjusting entries required at the end of January on page 2 of a general journal. Omit the descriptions. A. Prepaid rent for the year on January 1, 2019. Rent expired during the month of January 2019, $2,000. B. Purchased supplies for $7,600 on January 1, 2019. Inventory of supplies was $1,600 on January 31, 2019. C. Depreciation is computed using the straight-line method. Equipment purchased on January 1, 2019, for $15,000 has an estimated useful life of 5 years with no salvage value. D. Signed a 3-month contract for $600 of prepaid advertising on January 1, 2019.

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Question 42

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If the adjustment for supplies used is not recorded, the firm's assets will be overstated.

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Question 43

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Read the description of following adjustments that are required at the end of the accounting period for River Front Repair. Record the necessary adjusting entries required at the end of January on page 2 of a general journal. Omit the descriptions. A. Prepaid rent for the year on January 1, 2019. Rent expired during the month of January, $7,200. B. Equipment purchased on January 1, 2019, for $8,100 has an estimated useful life of 5 years with no salvage value. Depreciation is computed using the straight-line method. C. Purchased supplies for $650 on January 1, 2019. Inventory of supplies was $100 on January 31, 2019. D. Signed a 12-month contract for $4,800 of prepaid advertising on January 1, 2019.

During its first year of business, XYZ Inc. purchased $1,600 of supplies. By the end of the year, only $500 of supplies remain in the supply cabinet. Determine the amount to be reported in the Supplies account in the Adjusted Trial Balance section of the worksheet prepared on December 31.

Read the description of following adjustments that are required at the end of the accounting period for Drake Consulting Services. Determine the account and amount to be debited and the account and amount to be credited. A. Prepaid rent for one year on January 1, 2019, in the amount of $26,400. Record the adjustment on January 31, 2019. B. Purchased supplies for $1,600 on January 1, 2019. The inventory of supplies was $400 on January 31, 2019. Record the adjustment for the amount of the supplies that were used during the month of January 2019. C. Depreciation is computed using the straight-line method. Equipment purchased on January 1, 2019, for $36,000 has an estimated useful life of 6 years with no salvage value. Record the adjustment on January 31, 2019. D. Signed a 12-month contract for $3,000 of prepaid advertising on January 1, 2019. Record the adjustment for the amount of the advertising contract that expired during the month of January 2019.

The difference between the debit balance of the Equipment account and the credit balance of the Accumulated Depreciation-Equipment account is called the ________ of an asset.

The balances of the ledger accounts for Oleman Services on January 31, 2019, and the information needed for adjustments are shown below. Prepare the Trial Balance section, record the adjustments, and complete the worksheet. Salaries Expense 5,000 Supplies Expense -- Insurance Expense -- Utilities Expense 400 Depreciation Expense - Equipment -- Adjustment information: (a) The supplies were purchased on January 1, 2019. An inventory of supplies showed $600 on hand on January 31, 2019. (b) The amount of Prepaid Insurance represents a payment made January 1, 2019, for a six-month insurance policy. (c) The equipment, purchased January 1, 2019, has an estimated useful life of 5 years with no salvage value. The firm uses the straight-line method of depreciation.

The total assets on the balance sheet was $128,800 before journalizing and posting the adjusting entries for $800 of expired insurance, $2,400 of expired rent and $900 of depreciation. What are the total assets after journalizing and posting the adjusting?

Accumulated Depreciation, Equipment, is shown as:

If the prepaid expenses are not adjusted, assets on the balance sheet:

The normal balance of a contra asset account is a debit.

Read the description of the following adjustments that are required at the end of the accounting period for Riley Furniture Restoration. Determine the account and amount to be debited and the account and amount to be credited. A. Purchased supplies for $1,000 on June 1, 2019. Inventory of supplies was $300 on June 30, 2019. Record the adjustment for the amount of the supplies used during the month of June 2019. B. Signed a 4-month contract for $1,200 of prepaid advertising on June 1, 2019. Record the adjustment for the amount of the advertising contract that expired during the month of June 2019. C. Prepaid rent for one year on June 1, 2019, in the amount of $12,600. D. Depreciation is computed using the straight-line method. Equipment purchased on June 1, 2019, for $16,800 has an estimated useful life of 5 years with no salvage value. Record the adjustment on June 30, 2019.

Accumulated depreciation is classified as a(n)________ account.

A(n)________ is prepared at the end of each accounting period to organize and summarize the data needed for the preparation of the financial statements.

Match the accounting terms with the description by entering the proper letter in the space provided. A. Account form balance sheet B. Adjusting entries or adjustments C. Book value D. Contra account E. Contra asset account F. Depreciation G. Prepaid expenses H. Report form balance sheet I. Salvage value J. Straight-line depreciation K. Worksheet 1. Allocation of an asset's cost in equal amounts to each accounting period of the asset's useful life 2. Journal entries made to update accounts for items that were used or expired during the accounting period ________ 3. An estimate of the amount that could be received by selling or disposing of an asset at the end of its useful life ________ 4. A balance sheet that lists assets on the left and liabilities and owner's equity on the right 5. An account with a normal balance that is opposite that of a related account ________ 6. A form used to gather all data needed at the end of an accounting period to prepare financial statements ________ 7. That portion of an asset's original cost that has not yet been depreciated ________ 8. Expense items acquired, recorded, and paid for in advance of their use ________ 9. An asset account with a credit balance, which is contrary to the normal balance of an asset account 10. A balance sheet that lists the asset accounts first, followed by liabilities and owner's equity ________ 11. Allocation of the cost of a long-term asset to operations during its expected useful life

On a worksheet, the adjusted balance of Supplies is extended from the Adjusted Trial Balance Debit column to the ________ Debit column.

The balances of the ledger accounts for Lance's Landscaping Design on March 31, 2019, and the information needed for adjustments are shown below. Prepare the Trial Balance section, record the adjustments, and complete the worksheet. Adjustment information: (a)The supplies were purchased on March 1, 2019 An inventory of supplies showed $300 on hand on March 31, 2019. (b)The amount of Prepaid Insurance represents a payment made March 1, 2019, for a six-month insurance policy. (c)The equipment, purchased March 1, 2019, has an estimated useful life of 5 years with no salvage value. The firm uses the straight-line method of depreciation.

If long-term assets are not adjusted, expenses on the income statement:

The adjusting entry to account for the expiration of prepaid advertising consists of:

When the ________ method of depreciation is used, an equal amount of depreciation is charged to each accounting period during the asset's useful life.