Question 1

A business hired a repair service to overhaul its plumbing system.The repair service began work on September 15 and completed it on October 15.The business agreed to pay the service $4,000 when the work was completed.As of September 30,the work was 50% complete,and the business made an adjusting entry to accrue repair expense as of the end of September.On October 15,the work was completed,and the repair service was paid in full.Provide the journal entry for the cash payment on October 15.(Ignore explanation).

Accepted Answer

The answer of A business hired a repair service to...

Question 2

Accrued revenue represents the receipt of cash before the revenue has been earned.

Accepted Answer

Accrued revenue represents revenue that has been earned but not yet received in cash.

Question 3

Jupiter,Inc.signed a one-year $44,000 note payable at 8% interest on May 1,2016.If Jupiter,Inc.only adjusts its accounts once a year at year-end,how much interest expense was accrued on December 31,2016?

Accepted Answer

Interest Expense from May to December,
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Question 4

Kostner Financial Services,Inc.performed accounting services for a client in December.A bill was mailed to the client on December 30.The company received the client's check by mail on January 5.Which of the following accounts should appear on the income statement for the year ended December 31 as related to the services performed?

Accepted Answer

The income statement only reflects the revenue earned during the specific period being reported, which in this case is the year ended December 31. Since the services were performed in December, the corresponding revenue should be recognized in that same month, regardless of whether or not the payment was received in January. Therefore, the income statement should include Service Revenue as the account related to the services performed. The other options (B) Unearned Revenue, (C) Accounts Payable, and (D) Prepaid Expense are all balance sheet accounts and would not be included on the income statement for the year.

Question 5

Melville Services has a weekly payroll of $50,000.December 31,2016 falls on Thursday and Melville will pay its employees the following Monday (January 4,2017)for the previous full week.Assume that Melville has a five-day workweek and has an unadjusted balance in Salaries Expense of $845,000.Prepare the January 4,2017 journal entry.Reversing entries are not made.

Accepted Answer

The answer of Melville Services has a weekly payroll of...

Question 6

Magnolia Tree Service has a weekly payroll of $50,000.December 31,2016 falls on Thursday and Magnolia will pay its employees the following Monday (January 4,2017)for the previous full week.Assume that Anthony has a five-day workweek and has an unadjusted balance in Salaries Expense of $845,000.Prepare the December 31,2016 adjusting entry.

Accepted Answer

The answer of Magnolia Tree Service has a weekly payroll...

Question 7

Laramie,Inc.signed a contract with a service provider for security services at a rate of $260 per month for the period of January through June.Laramie,Inc.will pay the service provider the entire amount at the end of June.The company makes adjusting entries each month.During the month of June,it should record total security expense of $520.

Accepted Answer

Since Laramie, Inc. signed a contract for security services at a rate of $260 per month for the entire period of January through June, the total expense for security services should be $1,560 ($260 x 6 months). Therefore, the total security expense for the month of June should be $260, not $520. As such, the adjusting entry for the month of June should be to record an expense of $260 and a liability of $260, representing the amount owed to the service provider for the final month of the contract.

Question 8

Anthony Delivery Service has a weekly payroll of $32,000.December 31 falls on Tuesday and Anthony will pay its employees the following Monday (January 6)for the previous full week.Assume that Anthony has a five-day workweek and has an unadjusted balance in Salaries Expense of $925,000.What is the December 31 balance of Salaries Expense after adjusting entries are recorded and posted?

Accepted Answer

Salaries Expense: $925,000 + ($32,000 / 5 × 2 days )= $937,800

Question 9

On June 1,Edison,Inc.borrowed $24,000 on a one-year Note Payable with an interest rate of 10% per year.It will repay the principal and interest at the end of the one-year period.The company makes accrual adjustments at the end of each month.The company should record interest expense of $2,400 on June 30.

Accepted Answer

Interest Expense = ($24,000 × 10%)/ 12 = $200

Question 10

Accrued revenue is revenue that ________.

Accepted Answer

Accrued revenue refers to revenue that has been earned but not yet collected in cash. Option A is incorrect because revenue that has been collected and earned is referred to as "cash" or "cash receipts." Option B is incorrect because it refers to revenue that has been collected in cash but has not yet been earned, which is not considered revenue. Option D is incorrect because it refers to revenue that will be collected and earned in the future, which is not yet considered revenue.

Question 11

The employees of Sinclair Services,Inc.worked the last two weeks of December.They received their paychecks on January 2.Which of the following accounts should appear on the balance sheet as of December 31?

Accepted Answer

Salaries Payable should appear on the balance sheet as of December 31 because the employees have earned the salary for the last two weeks of December but have not been paid yet. This represents an obligation to pay in the future and therefore should be recorded as a liability on the balance sheet. Accounts Payable is not relevant in this scenario as it pertains to purchases made on credit, not employee wages. Salaries Expense is an income statement account that is used to record the cost of employee wages for a given period but has no relevance to the balance sheet. Prepaid Expense is also not relevant as it represents payments made in advance for goods or services to be received in the future.

Question 12

Argyle Designs,Inc.has entered into a contract to design 40 new dresses for a customer.It will collect a total of $40,000 after the design services are complete.Argyle started design work on June 1.As of June 30,it finished 8 of the 40 designs.The company will make an adjusting entry at the end of June to accrue $10,000 of service revenue.

Accepted Answer

The answer of Argyle Designs,Inc.has entered into a contract to...

Question 13

Bryson Services,Inc.performed accounting services for a client in December.A bill was mailed to the client on December 30.The company received a check by mail on January 5.Which of the following accounts should appear on the balance sheet as of December 31 as related to the services performed?

Accepted Answer

The services were performed in December, so the revenue earned should be recorded as Accounts Receivable on the balance sheet as of December 31. The fact that the bill was not paid until January 5 does not affect the reporting of revenue for the previous month. Prepaid Expense and Unearned Revenue do not apply in this scenario. There is a transaction that should be recorded in December, so D is not the correct answer.

Question 14

Mason Painting Services has a weekly payroll of $24,000.December 31 falls on Wednesday and Mason will pay its employees the following Monday (January 5)for the previous full week.Assume that Mason has a five-day workweek and has an unadjusted balance in Salaries Expense of $770,000.What amount should be debited to Salaries Expense on December 31?

Accepted Answer

$24,000 / 5 = $4,800 per day × 3 days = $14,400

Question 15

A business hired a repair service to overhaul its plumbing system.The repair service began work on September 15 and intends to complete it on October 15.The business will pay the repair service $4,000 when the work is completed.As of September 30,the work was 50% complete.Provide the adjusting entry to accrue repair expense by the end of September.(Ignore explanation).

Accepted Answer

The answer of A business hired a repair service to...

Question 16

Classic Artists' Services signed a contract with a maintenance service company to maintain a building that Classic will use for office purposes.The contract states that the work will begin work on February 1 and end on May 31.Classic Artists' will pay the maintenance service company $2,000 at the end of May.It accrues Maintenance Expense at the end of every month.What is the balance in the Accounts Payable account for amounts owed to the maintenance service company at the end of March?

Accepted Answer

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Question 17

Adjusting entries may involve any account,including Cash.

Accepted Answer

Adjusting entries do not involve cash.

Question 18

Adjusting entries either credit a revenue account or debit an expense account.

Accepted Answer

Adjusting entries are used to update revenue and expense accounts to ensure that the financial statements accurately reflect the company's financial position. These entries can either credit a revenue account or debit an expense account to reflect the correct amount of revenue or expense for the period.

Question 19

The employees of Leicester Services,Inc.worked the last two weeks of December,2016.They received their paychecks on January 2,2017.Which of the following accounts should appear on the income statement for the year ended December 31,2016?

Accepted Answer

Salaries Expense should appear on the income statement for the year ended December 31, 2016 because it is a period cost incurred by the company during that year. Prepaid Expense is an asset account that represents expenses paid in advance and would not be recognized as an expense until the related service is received. Salaries Payable is a liability account that represents amounts owed to employees and would not be recognized as an expense until the paychecks are issued. Unearned Revenue is a liability account that represents payments received in advance and would not be recognized as revenue until the related service is performed.

Question 20

Saturn,Inc.signed a one-year $24,000 note payable at 8% interest on May 1,2017.How much interest expense must be accrued on May 31,2017?

Accepted Answer

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Quiz 3: The Adjusting Process