Question 1

On January 1,Able Company purchased equipment costing $135,000 with an estimated salvage value of $10,500,and an estimated useful life of five years.Using the straight-line method,what is the amount that should be recorded as depreciation on December 31?
A)$27,000
B)$24,900
C)$29,100
D)$135,000
E)$10,500

Accepted Answer

To calculate straight-line depreciation, we need to subtract the salvage value from the cost of the equipment and divide that amount by the useful life in years:

($135,000 - $10,500) / 5 = $24,900

Therefore, the amount that should be recorded as depreciation on December 31 is $24,900.

Question 2

A landscaping project was completed during December and the accrued revenue of $15,000 was recorded in an adjusting entry dated December 31,2014.A check in this amount was received from the customer on January 20,2015.How would the company record this receipt of cash?
A)Debit Cash for $15,000 and credit Accounts Receivable for $15,000.
B)Debit Cash for $15,000 and credit Landscape Revenue for $15,000.
C)Debit Unearned Revenue for $15,000 and credit Landscape Revenue for $15,000.
D)Debit Cash for $15,000 and credit Unearned Revenue for $15,000.
E)Debit Landscape Revenue for $15,000 and credit Income Summary for $15,000.

Accepted Answer

The company would debit Cash to increase it and credit Accounts Receivable to decrease it, as the revenue was already accrued in December.

Question 3

A $900,000 note payable requires 10% annual interest with interest due monthly on the 15^th of each month.An interest payment of $7,500 was made on April 15 and the next payment is due on May 15.As of April 30,$3,750 of interest expense has accrued.How would the company record the related adjusting entry? A)Debit Interest Expense for $3,750 and credit Cash for $3,750. B)Debit Interest Expense for $3,750 and credit Interest Payable for $3,750. C)Debit Interest Payable for $3,750 and credit Cash for $3,750. D)Debit Interest Payable for $3,750 and credit Interest Expense for $3,750. E)Debit Interest Expense for $3,750,credit Interest Payable for $3,750 and credit cash for $7,500.

Accepted Answer

The adjusting entry would be to debit Interest Expense for the amount of interest accrued ($3,750) and credit Interest Payable for the same amount, since the company has incurred but not yet paid the interest expense. Option A is incorrect because there is no cash payment being made in this adjusting entry. Option C is incorrect because there is no cash receipt being recorded. Option D is incorrect because it incorrectly debits Interest Expense instead of Interest Payable. Option E is incorrect because it includes a credit to cash, which is not applicable in this adjusting entry.

Question 4

The Supplies account had an adjusted balance of $2,000 on December 31,2013.During 2014,the company purchased $5,000 of supplies.A physical count of supplies at December 31,2014,shows $3,000 of supplies available.(Assume that prepaid expenses are initially recorded in asset accounts and that fees collected in advance of work are initially recorded as liabilities.) How would the company record the related adjusting entry at December 31,2014?
A)Debit Supplies Expense for $4,000 and credit Supplies for $4,000.
B)Debit Supplies Expense for $3,000 and credit Supplies for $3,000.
C)Debit Supplies for $3,000 and credit Supplies Expense for $3,000.
D)Debit Supplies for $7,000 and credit Cash for $7,000.
E)Debit Supplies for $3,000 and credit Cash for $3,000.

Accepted Answer

The company started with $2,000 in supplies, purchased $5,000 more, totaling $7,000. The physical count shows $3,000 remaining, so $4,000 was used. The adjusting entry is to debit Supplies Expense for $4,000 and credit Supplies for $4,000 to account for the used supplies.

Question 5

What is the current ratio based on the following information,assuming all accounts have a normal balance? 
A)1.23
B)3.58
C)11.57
D)12.3
E)1.57

Accepted Answer

The answer of What is the current ratio based on...

Question 6

A company had service revenue of $250,000,rent expense of $10,000,utility expense of $3,500,salary expense of $18,500,depreciation expense of $9,000,advertising expense of $4,500,dividends in the amount of $18,000,and a beginning balance in retained earnings of $17,900.What is the balance in the income summary account before it is closed for the period?
A)$250,000
B)$45,500
C)$204,500
D)$222,400
E)$232,100

Accepted Answer

To calculate the balance in the income summary account before it is closed, we need to subtract all the expenses and dividends from the service revenue and add the beginning balance in retained earnings.

$250,000 (service revenue) 
- $10,000 (rent expense) 
- $3,500 (utility expense) 
- $18,500 (salary expense) 
- $9,000 (depreciation expense) 
- $4,500 (advertising expense) 
- $18,000 (dividends) 
+ $17,900 (beginning balance in retained earnings)

= $204,500

Therefore, the correct answer is C.

Question 7

Based on the following information,what would be the balance in the Retained Earnings Account,assuming all accounts have a normal balance? 
A)$0
B)$13,718
C)$13,155
D)$13,284
E)$2,563

Accepted Answer

Retained Earnings at the beginning of the period = $12,750
Net income for the period = $1,194
Dividends paid during the period = $660
Retained Earnings at the end of the period = $12,750 + $1,194 - $660 = $13,284. Therefore, the answer is D.

Question 8

One-half of the landscaping work related to $35,000 cash received in advance is performed this period.(Assume that prepaid expenses are initially recorded in asset accounts and that fees collected in advance of work are initially recorded as liabilities.) How would the company record the related adjusting entry?
A)Debit Unearned Revenue for $17,500 and credit Landscape Revenue for $17,500.
B)Debit Unearned Revenue for $35,000 and credit Landscape Revenue for $35,000.
C)Debit Unearned Revenue for $35,000 and credit Cash for $35,000.
D)Debit Unearned Revenue for $17,500 and credit Cash for $17,500.
E)Debit Cash for $35,000 and credit Landscape Revenue for $35,000.

Accepted Answer

When cash is received in advance for a service to be performed in the future, it is initially recorded as a liability called Unearned Revenue. As half of the landscaping work related to $35,000 cash received in advance is performed this period, the amount of revenue now earned is $17,500. Therefore, the company would debit Unearned Revenue for $17,500 and credit Landscape Revenue for $17,500 in the adjusting entry.

Question 9

Based on the following information,what would be the ending balance in the Retained Earnings account,assuming all accounts have a normal balance? 
A)$15,847
B)$13,718
C)$13,155
D)$13,284
E)$13,847

Accepted Answer

The answer of Based on the following information,what would be...

Question 10

A company had revenue of $550,000,rent expense of $100,000,utility expense of $10,000,salary expense of $125,500,depreciation expense of $39,000,advertising expense of $40,200,dividends in the amount of $183,000,and an ending balance in retained earnings of $402,300.What was the beginning retained earnings for the period?
A)$250,000
B)$235,300
C)$314,700
D)$367,000
E)$350,000

Accepted Answer

The answer of A company had revenue of $550,000,rent expense...

Question 11

Depreciation on the company's equipment for 2014 is $24,000.The company prepares and records adjusting entries on a monthly basis.How would the company record the related adjusting entry on December 31,2014?
A)Debit Depreciation Expense for $2,000 and credit Cash for $2,000.
B)Debit Depreciation Expense for $2,000 and credit Equipment for $2,000.
C)Debit Depreciation Expense for $2,000 and credit Accumulated Depreciation - Equipment for $2,000.
D)Debit Depreciation Expense for $24,000 and credit Accumulated Depreciation - Equipment for $24,000.
E)Debit Depreciation Expense for $24,000 and credit Equipment for $24,000.

Accepted Answer

The adjusting entry for depreciation on December 31, 2014 would be to debit the Depreciation Expense account for $2,000 and credit the Accumulated Depreciation - Equipment account for $2,000. This entry records the amount of depreciation expense that has accumulated from the beginning of the year to the end of the year, and reduces the carrying value of the equipment on the balance sheet. Option A is incorrect because cash is not involved in this transaction. Option B is incorrect because it would increase the carrying value of the equipment on the balance sheet, which is not correct. Option D is incorrect because it records the total amount of depreciation expense for the year, instead of just the portion that has accumulated by the end of the year. Option E is incorrect for the same reason as option B.

Question 12

A company had revenue of $550,000,rent expense of $100,000,utility expense of $10,000,salary expense of $125,500,depreciation expense of $39,000,advertising expense of $40,200,dividends in the amount of $183,000,and an ending balance in retained earnings of $402,300.What is the appropriate journal entry to close income summary?
A)Income Summary…………….$235,300 Retained Earnings………………..$235,300
B)Retained Earnings……………$235,300 Income Summary………………..$235,300
C)Income Summary…………….$52,300 Retained Earnings………………..$52,300.
D)Retained Earnings…………….$52,300 Income Summary………………...$52,300
E)Income Summary……………...$314,700 Retained Earnings…………………$314,700

Accepted Answer

Income Summary is closed to Retained Earnings for the amount of net income, which is $235,300 ($550,000 - $100,000 - $10,000 - $125,500 - $39,000 - $40,200).

Question 13

The Unadjusted Trial Balance columns of a work sheet total $84,000.The Adjustments columns contain entries for the following: 
Office supplies used during the period,$1,200.
Expiration of prepaid rent,$700.
Accrued salaries expense,$500.
Depreciation expense,$800.
Accrued service fees receivable,$400.
The Adjusted Trial Balance columns total is:
A)$80,400
B)$84,000
C)$85,700
D)$85,900
E)$87,600

Accepted Answer

The answer of The Unadjusted Trial Balance columns of a...

Question 14

Kasper Electric has two part-time employees,each of whom earns $200 per day.They are normally paid on Fridays for work completed Monday through Friday of the same week.December 27,2013,was a Friday,and they were paid in full on that day.The employees worked on Monday and Tuesday,December 30 and 31,2013.How would the company record the related adjusting entry on December 31,2013?
A)Debit Salaries Expense for $200 and credit Cash for $200.
B)Debit Salaries Expense for $400 and credit Cash for $400.
C)Debit Salaries Expense for $200 and credit Salaries Payable for $200.
D)Debit Salaries Expense for $400 and credit Salaries Payable for $400.
E)Debit Salaries Expense for $400,credit Salaries Payable for $200,and credit Cash for $200.

Accepted Answer

The adjusting entry should recognize the employees' earnings for December 30 and 31, which have not yet been paid as of December 31. Therefore, Salaries Expense should be debited for the total amount earned by both employees ($400), and Salaries Payable should be credited for the same amount, representing the amount owed but not yet paid.

Question 15

What is the total amount of current assets based on the following information,assuming all accounts have a normal balance? 
A)$74,800
B)$37,647
C)$60,265
D)$23,112
E)$60,953

Accepted Answer

The answer of What is the total amount of current...

Question 16

The Prepaid Insurance account had an unadjusted balance of $8,000 balance on December 31,2014.An analysis of insurance policies shows that $2,000 of unexpired insurance benefits remain at December 31,2014.How would the company record the related adjusting entry at December 31,2104?
A)Debit Prepaid Insurance for $8,000 and credit Cash for $8,000.
B)Debit Prepaid Insurance for $6,000 and credit Cash for $6,000.
C)Debit Insurance Expense for $6,000 and credit Prepaid Insurance for $6,000.
D)Debit Insurance Expense for $2,000 and credit Prepaid Insurance for $2,000.
E)Debit Prepaid Insurance for $2,000,debit Insurance Expense for $6,000,and credit Cash for $8,000.

Accepted Answer

The company needs to adjust for the expired insurance. The unexpired amount is $2,000, so $6,000 has expired ($8,000 - $2,000). Therefore, debit Insurance Expense for $6,000 and credit Prepaid Insurance for $6,000.

Question 17

A landscaping project was completed on December 31,but the customer has not yet been billed for the agreed-upon fee of $12,000.How would the company record the related adjusting entry?
A)Debit Accounts Receivable for $12,000 and credit Landscape Revenue for $12,000.
B)Debit Cash for $12,000 and credit Landscape Revenue for $12,000.
C)Debit Unearned Revenue for $12,000 and credit Landscape Revenue for $12,000.
D)Debit Cash for $12,000 and credit Unearned Revenue for $12,000.
E)Debit Landscape Revenue for $12,000 and credit Income Summary for $12,000.

Accepted Answer

The company should record the revenue earned but not yet billed by debiting Accounts Receivable and crediting Landscape Revenue.

Question 18

The company has earned (but not recorded) $6,000 of interest relating to an investment for the year ended December 31,2014.A check for this amount will be received on January 9,2015.How would the company record the related adjusting entry dated December 31,2014?
A)Debit Cash for $6,000 and credit Interest Revenue for $6,000.
B)Debit Interest Receivable for $6,000 and credit Interest Revenue for $6,000.
C)Debit Interest Expense for $6,000 and credit Interest Revenue for $6,000.
D)Debit Cash for $6,000 and credit Interest Receivable for $6,000.
E)Debit Interest Revenue for $6,000 and credit Income Summary for $6,000.

Accepted Answer

The company has earned (but not yet received) $6,000 of interest revenue for the year ended December 31, 2014. Therefore, the company should debit Interest Receivable (an asset account) for $6,000 to reflect the amount of interest revenue that has been earned but not yet received. Additionally, the company should credit Interest Revenue (a revenue account) for $6,000 to recognize the revenue that has been earned. This adjusting entry ensures that the company's financial statements reflect the accurate amount of revenue earned and assets owed as of December 31, 2014. Option A is not correct because cash has not been received yet. Option C is not correct because it assumes that the company incurred interest expense, which is not mentioned in the question. Option D is not correct because the company has not received cash yet. Option E is not correct because there is no Income Summary account mentioned in the question.

Question 19

Based on the following information,what would be the total on the credit side of a post- closing trial balance,assuming all accounts have a normal balance? 
A)$61,516
B)$74,671
C)$74,800
D)$87,955
E)$81,263

Accepted Answer

The answer of Based on the following information,what would be...

Question 20

On December 1,2014,Deana's had paid $6,000 for six months' rent beginning on that date.(Assume that prepaid expenses are initially recorded in asset accounts and that fees collected in advance of work are initially recorded as liabilities.) How would the company record the related adjusting entry at December 31,2014?
A)Debit Rent Expense for $6,000 and credit Cash for $6,000.
B)Debit Rent Expense for $6,000 and credit Prepaid Rent for $6,000.
C)Debit Prepaid Rent for $1,000 and credit Rent Expense for $1,000.
D)Debit Rent Expense for $1,000 and credit Prepaid Rent for $1,000.
E)Debit Rent Expense for $5,000 and credit Cash for $5,000.

Accepted Answer

At the end of December, one month of rent has been used up, so $1,000 of the prepaid rent needs to be recognized as an expense (rent expense) and moved out of the asset account (prepaid rent) with a debit to Rent Expense and a credit to Prepaid Rent. Therefore, the correct adjusting entry would be to debit Rent Expense for $1,000 and credit Prepaid Rent for $1,000.

Quiz 3: Adjusting Accounts for Financial Statements

On January 1,Able Company purchased equipment costing $135,000 with an estimated salvage value of $10,500,and an estimated useful life of five years.Using the straight-line method,what is the amount that should be recorded as depreciation on December 31?

A landscaping project was completed during December and the accrued revenue of $15,000 was recorded in an adjusting entry dated December 31,2014.A check in this amount was received from the customer on January 20,2015.How would the company record this receipt of cash?

What is the current ratio based on the following information,assuming all accounts have a normal balance?

Based on the following information,what would be the balance in the Retained Earnings Account,assuming all accounts have a normal balance?

Based on the following information,what would be the ending balance in the Retained Earnings account,assuming all accounts have a normal balance?

Depreciation on the company's equipment for 2014 is $24,000.The company prepares and records adjusting entries on a monthly basis.How would the company record the related adjusting entry on December 31,2014?

What is the total amount of current assets based on the following information,assuming all accounts have a normal balance?

The Prepaid Insurance account had an unadjusted balance of $8,000 balance on December 31,2014.An analysis of insurance policies shows that $2,000 of unexpired insurance benefits remain at December 31,2014.How would the company record the related adjusting entry at December 31,2104?

A landscaping project was completed on December 31,but the customer has not yet been billed for the agreed-upon fee of $12,000.How would the company record the related adjusting entry?

The company has earned (but not recorded) $6,000 of interest relating to an investment for the year ended December 31,2014.A check for this amount will be received on January 9,2015.How would the company record the related adjusting entry dated December 31,2014?

Based on the following information,what would be the total on the credit side of a post- closing trial balance,assuming all accounts have a normal balance?