Task about Adjusting Journal Entry

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.

Why Are Adjusting Entries Necessary

Accrued revenues B. Fiscal yearG.

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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 adjusted trial balance of Ninety-Six Inc. n December 31, 2008 includes the following accounts: Accumulated Depreciation, $6,000; Depreciation Expense, $2,000; Note Payable $7,500; Interest Expense $150; Utilities Expense, $300; Rent Expense, $500; Service Revenue, $19,600; Salaries Expense, $4,000; Supplies, $200; Supplies Expense, $1,200; Wages Payable, $600. Prepare an income statement for the month of December. Solution 173 |NINETY-SIX INC | |Income Statement | |For the month ended December 31, 2008 | | | Revenue | |Service Revenue ………………………………………………… 19,600 | | | |Expenses | |Salaries Expense …………………………………………………. 4,000 | |Interest Expense … ………………………………………………. 150 | |Rent Expense ……………………………………………………. 00 | |Supplies Expense ………………………………………………… 1,200 | |Utilities Expense ………………………………………………… 300 | |Depreciation Expense …………………………………………… 2,000 | |Total Expense ………………………………………………… 8,150 | |Net Income ………………………………………………………….. 11,450 | BE 174 The adjusted trial balance of Jesper Company at December 31,2008 includes the following accounts: Retained Earnings, Jan. 1 $12,600; Dividends $6,000; Service Revenue $35,000; Salaries Expense $13,000; Insurance Expense $2,000; Rent Expense $3,500; Supplies Expense $500; and Depreciation Expense $1,000. Prepare a retained earnings statement for the year. JESPER COMPANY | |Income Statement | |For the year ended December 31, 2008 | | | |Revenue | |Service Revenue ………………………………………………… 35,000 | | | |Expenses | |Salaries Expense …………………………………………………. 13,000 | |Insurance Expense ………………………………………………. ,000 | |Rent Expense ……………………………………………………. 3,500 | |Supplies Expense ………………………………………………… 500 | |Depreciation Expense …………………………………………… 1,000 | |Total Expense ………………………………………………… 20,000 | |Net Income ………………………………………………………….. 15,000 |