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Exam 5: Adjustments and the Worksheet

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Question 41

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Which of the following statements is correct?

A) The cost of supplies used is reported on the statement of owner's equity.
B) The cost of supplies used represents an operating expense of the business.
C) Accumulated Depreciation--Equipment is presented in the Liabilities section of a balance sheet.
D) At the time of their acquisition, prepaid expenses are recorded in expense accounts.

E) B) and C)
F) None of the above

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Question 42

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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 on page 2 of a general journal. Omit the descriptions. A. Prepaid rent for the year on January 1, 2013. Rent expired during the month of January 2013, $2,000. B. Purchased supplies for $7,600 on January 1, 2013. Inventory of supplies was $1,600 on January 30, 2013. C. Depreciation is computed using the straight-line method. Equipment purchased on January 1, 2013, 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, 2013.

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Question 43

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The balance of a liability account is extended to the Balance Sheet Credit column of the worksheet.

Read the description of following adjustments that are required at the end of the accounting period for Hubbard Repair Services. Determine the account and amount to be debited and the account and amount to be credited. A. Purchased supplies for $2,000 on November 1, 2013. Inventory of supplies was $600 on November 30, 2013. Record the adjustment for the amount of the supplies that were used during the month of November 2013. B. Signed a 4-month contract for $2,400 of prepaid advertising on November 1, 2013. Record the adjustment for the amount of the advertising contract that expired during the month of November 2013. C. Prepaid rent for the year on November 1, 2013. Rent expired during the month of November 2013, $1,500. Record the adjustment on November 30, 2013. D. Depreciation is computed using the straight-line method. Equipment purchased on November 1, 2013, for $6,000 has an estimated useful life of 5 years with no salvage value. Record the adjustment on November 30, 2013.

Which of the following statements is not correct?

When a trial balance is in balance,

On November 25, 2013, the company paid $24,000 rent in advance for a six-month period (December 2013 through May 2014) . On December 31, 2013, the adjustment for expired rent would include

Adjusting Entries are

The balances of the revenue accounts are recorded in the Trial Balance Credit column, the Adjusted Trial Balance Credit column, and the Balance Sheet Credit column of the worksheet.

The balances of the ledger accounts for Oleman Services on January 31, 2013, 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 January 1, 2013. An inventory of supplies showed $600 on hand on January 31, 2013. (b) The amount of Prepaid Insurance represents a payment made January 1, 2013, for a six-month insurance policy. (c) The equipment, purchased January 1, 2013, has an estimated useful life of 5 years with no salvage value. The firm uses the straight-line method of depreciation.

Preparation of a worksheet eliminates the necessity of preparing an income statement and a balance sheet.

When the liabilities and owner's equity section is listed under the assets section, the firm is using the ____________________ form balance sheet.

A(n) ____________________ is a comparison of the general ledger accounts with debit balances to the general ledger accounts with credit balances to make sure that the debit and credit totals are equal.

Accumulated Depreciation, Equipment, is shown as:

On a worksheet, the adjusting entry to account for depreciation of equipment consists of

The adjusting entry to account for the use of supplies consists of

Read each of the following transactions for Patel's Repair Services. Determine the accounts to be debited and credited in the necessary end-of-May adjustments. A. On May 1, 2013, Patel's Repair Services, a new firm, paid $6,600 rent in advance for a six-month period. The $6,600 was debited to the Prepaid Rent account. B. On May 1, 2013, the firm bought supplies for $2,000. The $2,000 was debited to the Supplies account. An inventory of supplies at the end of May showed that supplies costing $800 were on hand. C. On May 1, 2013, the firm bought equipment costing $10,000. The equipment has an expected useful life of 10 years and no salvage value. The firm will use the straight-line method of depreciation.

Which of the following statements is not correct?

On a worksheet, the adjusted balance of the Supplies Expense account is extended to:

Read each of the following transactions for Gallagher Enterprises. Determine the accounts and amounts to be debited and credited in the necessary end-of-January adjustments. A. On January 1, 2013, Gallagher Enterprises, a new firm, paid $6,000 rent in advance for a three-month period. The $6,000 was debited to the Prepaid Rent account. B. On January 1, 2013, the firm bought supplies for $3,000. The $3,000 was debited to the Supplies account. An inventory of supplies at the end of June showed that supplies costing $1,000 were on hand. C. On January 1, 2013, the firm bought equipment costing $12,000. The equipment has an expected useful life of 10 years and no salvage value. The firm will use the straight-line method of depreciation.