MGAB01H3 Chapter 4.2: chapter 4.2
MGAB01H3 Full Course Notes
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Question 23
If a resource has been consumed but a bill hasnot been received at the end of the accountingperiod, then
an expense should be recorded when the bill is received. | ||
an expense should be recorded when the cash is paid out. | ||
an adjusting entry should be made recognizing the expense. | ||
it is optional whether to record the expense before the bill isreceived. |
3 points
Question 24
Prepaid expenses are
paid and recorded in an asset account before they are used orconsumed. | ||
paid and recorded in an asset account after they are used orconsumed. | ||
incurred but not yet paid or recorded. | ||
incurred and already paid or recorded. |
3 points
Question 25
If a business has received cash in advance of services performedand credits a liability account, the adjusting entry needed afterthe services are performed will be
debit Unearned Service Revenue and credit Cash. | ||
debit Unearned Service Revenue and credit Service Revenue. | ||
debit Unearned Service Revenue and credit Prepaid Expense. | ||
debit Unearned Service Revenue and credit AccountsReceivable. |
3 points
Question 26
The preparation of adjusting entries is
straight forward because the accounts that need adjustment willbe out of balance. | ||
often an involved process requiring the skills of aprofessional. | ||
only required for accounts that do not have a normalbalance. | ||
optional when financial statements are prepared. |
3 points
Question 27
On January 1 of the current year, Doolittle Company purchasedfurniture for $7,560. The company expects to use the furniture for3 years. The asset has no salvage value. The book value of thefurniture at December 31of this year is
$0. | ||
$2,520. | ||
$5,040. | ||
$7,560. |
3 points
Question 28
Husker Du Supplies Inc. purchased a 12-month insurance policy onMarch 1 of the current year for $1,800. At March 31, the adjustingjournal entry to record expiration of this asset will include a
debit to Prepaid Insurance and a credit to Cash for $1,800. | ||
debit to Prepaid Insurance and a credit to Insurance Expense for$200. | ||
debit to Insurance Expense and a credit to Prepaid Insurance for$150. | ||
debit to Insurance Expense and a credit to Cash for $150. |
Reliable Repairs & Service, an electronics repair store, prepared the following unadjusted trial balance at the end of its first year of operations:
Reliable Repairs & Service
UNADJUSTED TRIAL BALANCE
April 30, 2016
ACCOUNT TITLE | DEBIT | CREDIT | |
---|---|---|---|
1 | Cash | 10,350.00 | |
2 | Accounts Receivable | 67,500.00 | |
3 | Supplies | 16,200.00 | |
4 | Equipment | 116,100.00 | |
5 | Accounts Payable | 15,750.00 | |
6 | Unearned Fees | 18,000.00 | |
7 | Karin Bickle, Capital | 121,500.00 | |
8 | Karin Bickle, Drawing | 13,500.00 | |
9 | Fees Earned | 294,750.00 | |
10 | Wages Expense | 94,500.00 | |
11 | Rent Expense | 72,000.00 | |
12 | Utilities Expense | 51,750.00 | |
13 | Miscellaneous Expense | 8,100.00 | |
14 | Totals | 450,000.00 | 450,000.00 |
For preparing the adjusting entries, the following data were assembled:
a. | Fees earned but unbilled on April 30 were $9,850. |
b. | Supplies on hand on April 30 were $4,660. |
c. | Depreciation of equipment was estimated to be $6,470 for the year. |
d. | The balance in unearned fees represented the April 1 receipt in advance for services to be provided. During April, $15,000 of the services were provided. |
e. | Unpaid Wages accrued on April 30 were $5,200. |
Required: | |
1. | Journalize the adjusting entries necessary on April 30, 2016. Refer to the Chart of Accounts for exact wording of account titles. |
2. | Determine the revenues, expenses, and net income of Reliable Service & Repairs before the adjusting entries. |
3. | Determine the revenues, expenses, and net income of Reliable Service & Repairs after the adjusting entries. |
4. | Determine the effect of the adjusting entries on Karin Bickle, Capital. |
Chart of Accounts
CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||
Reliable Repairs & Service | |||||||||||||||||||||||||||||||||||||||||||||
General Ledger | |||||||||||||||||||||||||||||||||||||||||||||
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Journal
1. Journalize the adjusting entries necessary on April 30, 2016. Refer to the Chart of Accounts for exact wording of account titles.
PAGE 10
JOURNAL
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | |
---|---|---|---|---|---|
1 | Adjusting Entries | ||||
2 | |||||
3 | |||||
4 | |||||
5 | |||||
6 | |||||
7 | |||||
8 | |||||
9 | |||||
10 | |||||
11 |
Final Questions
2. Determine the revenues, expenses, and net income of Reliable Service & Repairs before the adjusting entries.
Before Adjusting Entries |
1 | Revenues | |
2 | Expenses | |
3 | Net income |
3. Determine the revenues, expenses, and net income of Reliable Service & Repairs after the adjusting entries.
After Adjusting Entries |
1 | Revenues | |
2 | Expenses | |
3 | Net income |
4. Determine the effect of the adjusting entries on Karin Bickle, Capital.
The capital account by