202)
Given the table below, indicate the impact of the following errors made during the adjusting entry
process. Use a “+” followed by the amount for overstatements, a “-“ followed by the amount for
understatements, and a “0” for no effect. The first one is done as an example.
Ex. Failed to recognize that $600 of unearned revenues, previously recorded as liabilities, had been
earned by year-end.
1. Failed to accrue interest expense of $200.
2. Forgot to record $7,700 of depreciation on machinery.
3. Failed to accrue $1,300 of revenue earned but not collected.
Error
Revenues
Expenses
Assets
Liabilities
Equity
EX
-$600
0
0
+$600
-$600
1.
_________
_________
_________
_________
_________
2.
_________
_________
_________
_________
_________
3.
_________
_________
_________
_________
_________
Revenues
Expenses
203)
A company issued financial statements for the year ended December 31, but failed to include the
following adjusting entries:
A. Accrued interest revenue earned of $1,200.
B. Depreciation expense of $4,000.
C. Portion of prepaid insurance expired (an asset) used $1,100.
D. Accrued taxes of $3,200.
E. Revenues of $5,200, originally recorded as unearned, have been earned by the end of the year.
Determine the correct amounts for the December 31 financial statements by completing the following
table:
Assets
Liabilities
Equity
Net Income
Reported
amounts
$350,000
$200,000
$150,000
$70,000
Add (subtract) to
correct for item:
A
101
A
B
C
D
E
Corrected amounts
$
$
$
$
A
B
C
D
E
Corrected amoun
204)
Using the table below, indicate the impact of the following errors made during the adjusting entry
process. Use a “+” for overstatements, a “-” for understatements, and a “0” for no effect. The first
one is provided as an example.
Error
Revenues
Expenses
Assets
Liabilities
Equity
Ex.
Did not record depreciation
for this period
0
–
+
0
+
1.
Did not record unpaid
telephone bill
2.
Did not adjust unearned
revenue account for revenue
earned this period.
3.
Did not adjust shop supplies
for supplies used this period
4.
Did not accrue employee
salaries for this period
5.
Recorded rent expense owed
102
5.
Recorded rent expense owed
with a debit to insurance
expense and a credit to rent
payable
205)
Andrew’s net income was $280,000; its total assets were $1,050,000; and its net sales were
$3,500,000. Calculate the company’s profit margin ratio.
206)
Farmers’ net income was $740,000 and its net sales were $8,000,000. Calculate its profit margin
ratio.
207)
From the information provided, calculate Giuseppe’s profit margin ratio for each of the three years.
Comment on the results, assuming that the industry average for the profit margin ratio is 6% for each
of the three years.
2017
2016
2015
Net income
$ 2,630
$ 2,100
$ 1,850
Net Sales
36,500
32,850
31,200
Total Assets
400,000
385,000
350,000
208)
On December 14, Branch Company received $3,000 cash for 30 days of consulting services that
will be completed on January 13. Branch records all such prepayments by customers in a liability
account. Prepare the December 31 adjusting entry.
209)
On December 31, Chu Company had performed $3,000 of management services for clients that had
not yet been billed. Prepare Chu’s adjusting entry to record these fees earned.
210)
A company’s employees earn a total of $10,000 per week for a 5-day week that begins on Monday.
December 31 of Year 1 is a Monday, and all employees worked that day.
a) Prepare the required adjusting journal entry to record accrued salaries on December 31, Year 1.
b) Prepare the journal entry to record the payment of salaries on January 4, Year 2. (Assume no
reversing entries were made).
211)
Glisten Co. leases an office to a tenant at the rate of $3,000 per month. The tenant contacted Glisten
and arranged to pay the rent for December on January 8 of the following year. Glisten agrees to this
arrangement.
a.) Prepare the journal entry that Glisten must make at year ended December 31 to record the accrued
rent revenue.
b.) Prepare the journal entry to record the receipt of the rent on January 8 of the following year
(Assume no reversing entries were made).
212)
Prior to recording adjusting entries on December 31, a company’s Office Supplies account had an
$780 debit balance. A physical count of the supplies showed $425 of unused supplies available as
of December 31. Prepare the required adjusting entry.
108
213)
Complete the following by filling in the blanks:
(1) The Prepaid Insurance account had a $545 debit balance at the beginning of the current year;
$650 of insurance premiums were paid during the year; and the year-end balance sheet showed $420
of prepaid insurance; consequently, the income statement for the year must have shown $________
of insurance expense.
(2) The Office Supplies account began the current year with a $235 debit balance; the income
statement for the year showed $475 of office supplies expense; and the year-end balance sheet
showed the current asset, office supplies, at $275; consequently, if all supplies were accounted for,
$ of office supplies must have been purchased during the year.
214)
Werner Company had $1,300 of store supplies at the beginning of the current year. During this
year, Werner purchased $6,250 worth of store supplies. On December 31, $1,125 worth of store
supplies remained. Calculate the amount of Werner Company’s store supplies expense for the
current year.
215)
Prepare general journal entries on December 31 to record the following unrelated year-end
adjustments.
a. Estimated depreciation on equipment for the year, $4,500.
b. The Prepaid Insurance account has a $3,680 debit balance before adjustment. An examination of
insurance policies shows $600 of insurance expired.
c. The Prepaid Insurance account has a $2,400 debit balance before adjustment. An examination of
insurance policies shows $950 of unexpired insurance.
d. The company has three office employees who each earn $100 per day for a five-day workweek
that ends on Friday. The employees were paid on Friday, December 26, and have worked full days
on Monday, Tuesday, and Wednesday, December 29, 30, and 31.
e. On November 1, the company received 6 months’ rent in advance from a tenant whose rent is
$700 per month. The $4,200 was credited to the Unearned Rent account.
f. The company collects rent monthly from its tenants. One tenant whose rent is $1,000 per month
has not paid his rent for December.
216)
Rogers Company’s employees are paid a total of $1,600 per day for a 5-day workweek. The
employees are paid each Friday. This year the accounting period ends on Tuesday. Prepare the
December 31 year-end adjusting journal entry Rogers Company should make to accrue salaries.
217)
Show the December 31 adjusting entry to record $750 of earned but unpaid salaries of employees
at the end of the current accounting period.
218)
Juno Company had $500 of office supplies available at the beginning of the current year. During the
year Juno Company purchased $2,750 worth of office supplies, which were debited to the office
supplies account. On December 31 of this year, $375 worth of office supplies remained.
a. Calculate the amount of Juno Company’s office supplies expense for the current year. (Show your
calculations.)
b. Prepare the journal entry to adjust the supplies account.
111
219)
During the current year ended December 31, clients paid fees in advance for accounting services
amounting to $15,000. These fees were recorded in an account called Unearned Accounting Fees.
If $3,500 of these fees remains unearned on December 31 of this year, prepare the required
December 31 adjusting entry to bring the accounts up to date.
220)
The following unadjusted and adjusted trial balances are from the current year’s accounting system
for Excelsior.
Excelsior
Trial Balances
For Year Ended December 31
Unadjusted Adjusted
Trial Balance Trial Balance
Debit Credit Debit Credit
Cash
11,300
11,300
Accounts receivable
16,340
17,140
Office supplies
1,145
645
Prepaid advertising
1,000
450
Building
Accumulated depreciation–Building
26,700
1,300
26,700
6,300
Accounts payable
3,320
3,500
Unearned services revenue
4,410
3,010
D. Ruiz, Capital
17,905
17,905
Services revenue
Salaries expense
34,500
72,400
34,500
74,600
Utilities expense
5,450
5,630
Advertising expense
2,900
3,450
Supplies expense
500
Depreciation expense– building 5,000
Total 99,335 99,335 105,315 105,315
Present the six adjusting entries in general journal form that explain the changes in the account
balances from the unadjusted to the adjusted trial balance.
112
221)
Trapper Company’s unadjusted and adjusted trial balances on December 31 of the current year are
as follows:
Unadjusted Adjusted
Trial Balance Trial Balance
Cash 4,000 4,000
Prepaid insurance 1,500 1,200
Equipment 9,000 9,000
Accumulated depreciation–
Equipment 800 1,800
Salaries payable 1,000
Unearned repair fees 2,500 600
Repair fees earned 10,000 11,900
Salaries expense 3,500 4,500
Depreciation expense–Equip. 1,000
Insurance expense
700
1,000
Black, Capital
5,400
5,400
18,700
18,700
20,700 20,700
Present the four adjusting journal entries that were recorded by Trapper Company.
222)
Record the December 31 adjusting entries for the following transactions and events in general
journal form. Assume that December 31 is the end of the annual accounting period.
a. The Prepaid Insurance account shows a debit balance of $2,340, representing the cost of a
two-year fire insurance policy that was purchased on October 1 of the current year and has not been
adjusted to-date.
b. The Store Supplies account has a debit balance of $400; a year-end inventory count reveals $80 of
supplies still on hand.
c. On November 1 of the current year, Rent Earned was credited for $1,500. This amount
represented the rent earned for a three-month period beginning November 1.
d. Estimated depreciation on store equipment is $600.
e. Accrued salaries amount to $1,400.
114
223)
Based on the unadjusted trial balance for Highlight Styling and the adjusting information given
below, prepare the adjusting journal entries for Highlight Styling.
Highlight Stylings’ unadjusted trial balance for the current year follows:
Highlight Styling
Trial Balance
December 31
Cash………………………………………………….
$ 2,200
Prepaid insurance …………………………………...
1,680
Shop supplies
……………………………………..……………..
790
Shop equipment …………………………………….
3,860
Accumulated depreciation–shop equipment ………..
$
770
Building……………………………………………...
59,500
Accumulated depreciation–building………………..
3,840
Land ………………….
55,000
Unearned rent………………………………………..
2,600
Long–term notes payable…………………………….
50,000
Bella Hanson, Capital ……………………………….
48,860
Rent earned ………………………………………….
2,400
Fees earned ………………………………………….
23,400
Wages expense ………………………………………
3,200
Utilities expense ……………………………………
690
Property taxes expense …………………………….
600
Interest expense ……………………………………
4,350
________
Totals ………………………………………………..
$131,870
$131,870
Additional information:
115
a. An insurance policy examination showed $1,040 of expired insurance.
b. An inventory count showed $210 of unused shop supplies still available.
c. Depreciation expense on shop equipment, $350.
d. Depreciation expense on the building, $2,020.
e. A beautician is behind on space rental payments, and this $200 of accrued revenues was
unrecorded at the time the trial balance was prepared.
f. $800 of the Unearned Rent account balance was still unearned by year-end.
g. The one employee, a receptionist, works a five-day workweek at $50 per day. The employee was
paid last week but has worked four days this week for which she has not been paid.
h. Three months’ property taxes, totaling $450, have accrued. This additional amount of property
taxes expense has not been recorded.
i. One month’s interest on the note payable, $600, has accrued but is unrecorded.
224)
Based on the unadjusted trial balance for Glow Styling and the adjusting information given below,
prepare the adjusting journal entries for Glow Styling. After completing the adjusting entries, prepare
the trial balance for Glow Styling.
Glow Styling unadjusted trial balance for the current year follows:
Cash………………………………………………….
$ 4,200
Prepaid insurance ……………………………………
1,480
Shop supplies ……………..……………………………………..
990
Shop equipment …………………………………….
3,860
Accumulated depreciation–shop equipment ………..
$ 770
Building………………………………………………
57,500
Accumulated depreciation–building………………..
3,840
Land ………………….
55,000
Unearned rent………………………………………..
1,600
Long-term notes payable…………………………….
50,000
Bella Hanson, Capital ……………………………….
49,860
Rent earned ………………………………………….
2,400
Fees earned ………………………………………….
23,400
Wages expense ………………………………………
3,200
Utilities expense ……………………………………
690
Property taxes expense …………………………….
600
Interest expense ……………………………………
4,350
________
Totals ………………………………………………..
$131,870
Glow Styling
Trial Balance
December 31
$131,870
Additional information:
a. An insurance policy examination showed $1,240 of expired insurance.
b. An inventory count showed $210 of unused shop supplies still available.
c. Depreciation expense on shop equipment, $350.
d. Depreciation expense on the building, $2,220.
e. A beautician is behind on space rental payments, and this $200 of accrued revenues was
unrecorded at the time the trial balance was prepared.
f. $800 of the Unearned Rent account balance was earned by year-end.
g. The one employee, a receptionist, works a five-day workweek at $50 per day. The employee was
paid last week but has worked four days this week for which she has not been paid.
h. Three months’ property taxes, totaling $450, have accrued. This additional amount of property
taxes expense has not been recorded.
i. One month’s interest on the note payable, $600, has accrued but is unrecorded.
Use the above information to prepare the adjusted trial balance for Glow Styling.
225)
Using the information presented below, prepare an income statement from the adjusted trial
balance of Dodson Containers.
DODSON CONTAINERS
Adjusted Trial Balance
December 31
Cash
$ 3,050
Accounts receivable
400
Prepaid insurance
830
Office supplies
80
Office equipment
4,200
Accumulated depreciation–office equipment
$ 1,100
Buildings
98,000
Accumulated depreciation–buildings
28,000
Land
115,000
Wages Payable
880
Property taxes payable
1,400
Interest payable
2,200
Unearned rent
460
Long-term notes payable
150,000
Frank Dodson, Capital
40,340
Frank Dodson, Withdrawals
21,000
Rent earned
67,500
Wages expense
29,000
Utilities expense
2,900
Property taxes expense
2,400
Insurance expense
5,800
Office supplies expense
250
Depreciation expense–office equipment
400
Depreciation expense–buildings
5,570
Interest expense
3,000
$291,880
________
$291,880
Totals