8) The following extract was taken from the worksheet of Special Events Bakers for the year 2019.
Special Events Bakers
Worksheet
December 31, 2019
Account Names
Cash
Equipment
Accumulated Depreciation – Equipment
Unadjusted Trial Balance
Debit Credit
$7,000
15,500
$8,500
Adjusted Trial Balance
Debit Credit
$7,000
15,500
$9,600
For the above information, determine the amount of Depreciation Expense for the equipment used in the
business.
A) $9,600
B) $2,600
C) $5,900
D) $1,100
9) The following extract was taken from the worksheet of Miller and Miller, Inc. for the year 2019.
Miller and Miller, Inc.
Worksheet
December 31, 2019
Account Names
Prepaid Rent
Office Supplies
Rent Expense
Depreciation Expense – Equipment
Unadjusted Trial Balance
Debit Credit
$1,200
2,000
800
0
Adjusted Trial Balance
Debit Credit
$ 0
750
2,000
1,500
From the above information, determine the amount of the Rent Expense adjustment.
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10) The partial worksheet of Browning Furniture is as follows:
Browning Furniture
Worksheet
December 31, 2019
Unadjusted Trial Adjusted Trial
Balance Adjustments Balance
Account Names Debit Credit Debit Credit Debit Credit
Cash $6,500
Accounts Receivable 2,000 $3,000
Office Supplies 1,800 $500
Equipment 15,000
Accumulated
Depreciation—Equipment $8,700 1,200
Common Stock 15,000
Dividends 3,000
Service Revenue 10,600 3,000
Salaries Expense 4,000
Rent Expense 2,000
Depreciation Expense — 1,200
Equipment
Supplies Expense ______ ______ 500 _____
Total $34,300 $34,300 $4,700 $4,700
Calculate and enter the amounts for the Adjusted Trial Balance columns.
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Copyright © 2018 Pearson Education, Inc.
Answer: Browning Furniture
Worksheet
December 31, 2019
Unadjusted Trial Adjusted Trial
Balance Adjustments Balance
Account Names Debit Credit Debit Credit Debit Credit
Cash $6,500 $6,500
Accounts Receivable 2,000 3,000 5,000
Office Supplies 1,800 $500 1,300
Equipment 15,000 15,000
Accumulated
Depreciation—Equipment $ 8,700 1,200 $9,900
Common Stock 15,000 15,000
Dividends 3,000 3,000
Service Revenue 10,600 3,000 13,600
Salaries Expense 4,000 4,000
Rent Expense 2,000 2,000
Depreciation Expense — 1,200 1,200
Equipment
Supplies Expense ______ ______ 500 _____ 500 ______
Total $34,300 $34,300 $4,700 $4,700 $38,500 $38,500
Diff: 3
LO: 3-6
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Application
H2: How Could a Worksheet Help in Preparing Adjusting Entries and the Adjusted Trial Balance? (H1)
3.7 Learning Objective 3-7
1) Marcy’s Event Planning Services, Inc. records deferred expenses and deferred revenues using the
alternative treatments. The business makes adjusting entries as needed to bring its books to the full
accrual basis once a year at the end of the year. On October 1, Marcy’s paid $3,600 for insurance for a one–
year period. At the end of the year, it will make an adjusting entry that debits Insurance Expense for
$1,500.
2) Deferred expenses are also called prepaid expenses.
3) Deferred expenses are advanced payments of future expenses.
4) Williams Enterprises prepaid eight months of office rent totaling $9,000 on October 1, 2019. Assuming
Williams records deferred expenses using the alternative treatment, what would be the entry on October
1, 2019?
A) Debit Prepaid Rent and credit Cash for $9,000.
B) No entry is needed until the expense is incurred.
C) Debit Cash and credit Unearned Rent for $9,000.
D) Debit Rent Expense and credit Cash for $9,000.
5) Janno Enterprises prepaid four months of office rent totaling $9,000 on October 1, 2019. The rent
period begins on October 1. Assuming Janno records deferred expenses using the alternative treatment,
what would be the adjusting entry recorded on December 31, 2019?
A) Debit Rent Expense and credit Prepaid Rent for $6,750.00.
B) No entry is needed since Rent Expense was recorded on October 1, 2019.
C) Debit Prepaid Rent and credit Rent Expense for $2,250.00.
D) Debit Prepaid Rent and credit Rent Expense for $27,000.00.
6) On March 1, 2016, Nortons, Inc. paid $60,000 as office rent covering the three-month period ending
May 31, 2016. Journalize the entry on March 1 by using the alternative treatment of deferred expenses.
Omit explanation.
7) On March 1, 2018, LeClaire, Inc. paid $60,000 for office rent covering the three-month period ending
May 31, 2018. Journalize the adjusting entry on March 31 by using the alternative treatment of deferred
expenses. Omit explanation.
8) Wentfield Services, Inc. records deferred expenses as expenses when payment is made in advance and
deferred revenues as revenues when the payment is received in advance. At the end of the year,
Wentfield Services, Inc. makes the necessary adjustments based on accrual basis accounting. On July 1, it
paid rent for an office in the amount of $24,000 for the period July 1 through June 30 of the following
year. Prepare the year-end adjusting entry on December 31. Omit explanation.
9) Aspen Event Planning Services, Inc. records deferred expenses and deferred revenues using alternative
treatments. It makes adjusting entries as needed to bring its books to the full accrual basis once a year at
the end of the year. On December 15, it collected $3,000 from a customer in advance for a series of events
that will start late December and end in March. At the end of the year, it had performed approximately
10% of the services for its customer. The adjusting entry on December 31 will include a debit to Service
Revenue for $2,700.
10) Deferred revenues are assets because the business has collected the cash before earning the revenue.
11) Deferred revenues, also called unearned revenues, arise when a business collects cash before earning
the revenue.
12) On September 1, Patterson Maintenance Company contracted to provide monthly maintenance
services for the next three months at a rate of $2,400 per month. The client paid Patterson $7,200 on
September 1. Assuming Patterson records deferred revenues using the alternative treatment, what would
be the entry on September 1?
A) Debit Cash and credit Unearned Revenue for $7,200.
B) No entry is needed until the services are performed.
C) Debit Cash and credit Service Revenue for $7,200.
D) Debit Prepaid Maintenance and credit Cash for $7,200.
13) On September 1, Advantage Maintenance Company contracted to provide monthly maintenance
services for the next five months at a rate of $3,000 per month. The client paid Advantage $15,000 on
September 1. The maintenance services began on that date. Assuming Advantage records deferred
revenues using the alternative treatment, what would be the adjusting entry recorded on December 31?
A) No entry is needed since revenue was recorded on September 1.
B) Debit Service Revenue and credit Unearned Revenue for $3,000.
C) Debit Service Revenue and credit Unearned Revenue for $15,000.
D) Debit Unearned Revenue and credit Service Revenue for $12,000.
14) On December 15, 2018, Donald Services, Inc. collected revenue of $3,000 in advance from a new client,
and agreed to provide services to the client for the period of December 15 through January 15 of the
following year. Assume that the company records deferred revenues using the alternative treatment, and
journalize the adjusting entry recorded on December 31, 2018. Omit explanation.
15) On December 15, 2018, Donald Services, Inc. collected revenue of $3,000 in advance from a new client,
and agreed to provide services to the client for the period of December 15 through January 15 of the
following year. Assume that the company records deferred revenues using the alternative treatment.
Prepare the December 15, 2018 journal entry. Omit explanation.