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Exam 3: The Adjusting Process

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Question 31

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A business pays weekly salaries of $25,000 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on Tuesday is

A) debit Salaries Payable, $10,000; credit Cash, $10,000
B) debit Salary Expense, $10,000; credit Dividends, $10,000
C) debit Salary Expense, $10,000; credit Salaries Payable, $10,000
D) debit Dividends, $10,000; credit Cash, $10,000

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Question 32

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Using accrual accounting, revenue is recorded and reported only

A) when cash is received without regard to when the services are rendered
B) when the services are rendered without regard to when cash is received
C) when cash is received at the time services are rendered
D) if cash is received after the services are rendered

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Question 33

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Ski Master Company pays weekly salaries of $18,000 on Friday for a five-day week ending on that day. Journalize the necessary adjusting entry at the end of the accounting period, assuming that the period ends on Wednesday.

If the adjustment for accrued salaries at the end of the period is inadvertently omitted, both liabilities and stockholders' equity will be understated for the period.

The balance in the office supplies account on June 1 was $7,500, supplies purchased during June were $3,100, and the supplies on hand at June 30 were $2,300. The amount to be used for the appropriate adjusting entry is

Which of the following pairs of accounts could not appear in the same adjusting entry?

Accrued expenses are ordinarily reported on the balance sheet as

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

The balance in the unearned fees account, before adjustment at the end of the year, is $10,250. Journalize the adjusting entry required if the amount of unearned fees at the end of the year is $3,125.

Under the accrual basis, some accounts in the ledger require updating. Discuss the three main reasons for this updating and give an example of each.

A contra asset account for Land will normally appear in the balance sheet.

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

The matching concept

The company determines that the interest expense on a note payable for period ending December 31st is $775. This amount is payable on January 1st. Prepare the journal entries required on December 31st and January 1st.

Which one of the following accounts below would likely be included in a deferral adjusting entry?

A company pays $36,000 for twelve month's rent on October 1. The adjusting entry on December 31 is debit Rent Expense, $9,000 and credit Prepaid Rent, $9,000.

A business pays bi-weekly salaries of $20,000 every other Friday for a ten-day period ending on that day. The last pay day of December is Friday, December 27. Assuming the next pay period begins on Monday, December 30, journalize the adjusting entry necessary at the end of the fiscal period (December 31).

If the effect of the debit portion of an adjusting entry is to increase the balance of an expense account, which of the following describes the effect of the credit portion of the entry?

By matching revenues and expenses in the same period in which they incur

The prepaid insurance account had a beginning balance of $6,600 and was debited for $2,300 of 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.