86) On November 30, the balance in the Supplies account was $500. During December additional supplies
were purchased of $200. On December 31, there was $200 worth of Supplies on hand. What would be the
adjustment for the month of December for Supplies?
$ ________
87) The company pays $5,000 per 5-day work week. The total expenses as of Friday, April 27 were
$12,000. What would be the month’s total expenses as of April 30 (assuming no pay is earned over the
weekend)?
$ ________
88) On the worksheet, the Income Statement debit column totaled $13,000 and the credit column totaled
$15,000. What is the amount of Net Income?
$ ________
89) On the worksheet, the Balance Sheet debit column totaled $1,400 and the credit column totaled $2,000.
What is the amount of Net Loss?
$ ________
90) What is the purpose of adjusting entries? Discuss the effect of not preparing adjusting entries on
various accounts.
91) What are the differences between depreciation expense and accumulated depreciation?
4.2 Learning Objective 4-2
1) The capital balance amount shown in the balance sheet column of the worksheet represents:
A) the beginning capital plus net income interest.
B) the beginning capital plus net income less withdrawal.
C) the beginning capital less withdrawals plus any investments to capital during the period.
D) the beginning capital plus any investments to capital that occurred during the period.
2) When Balance Sheet credits exceed the debits on the worksheet:
A) a net loss has occurred.
B) a net income has occurred.
C) an error has been made.
D) the income statement credits exceed the debits on the worksheet.
3) On a worksheet, the income statement debit column totals $11,000 and the credit column totals $9,500
following statements is correct?
A) The company had a net loss of $1,500.
B) The company had a net income of $1,500.
C) The company’s revenues were greater than expenses.
D) None of the above is correct.
4) On a worksheet, the balance sheet debit column total is $1,000 and the credit column total is $2,200.
Which of the following statements is correct?
A) The company had a net income of $1,200.
B) The company had a loss of $1,200.
C) The company’s expenses were greater than revenues.
D) There is a $1,200 error.
5) Withdrawals would most likely be found in which column of the worksheet?
A) Income Statement
B) Balance Sheet
C) Trial Balance
D) Owner’s Equity Statement.
6) The order of the steps to prepare the worksheet are:
A) prepare the trial balance, complete adjustments, prepare the adjusted trial balance, extend the
respective totals to the Income Statement and Balance Sheet columns.
B) complete the adjustments, prepare the adjusted trial balance, prepare the trial balance, extend the
respective totals to the Income Statement and Balance Sheet columns.
C) extend the totals to the Income Statement and Balance Sheet columns, prepare the trial balance,
complete the adjustments, prepare the adjusted trial balance.
D) prepare the adjusted trial balance, complete the adjustments, prepare the trial balance, extend the
respective totals to the Income Statement and Balance Sheet columns.
7) The adjusted trial balance columns:
A) help to ensure the ledger is still in balance.
B) help to identify any errors that may have been made during adjustment.
C) show updated account balances to aid in preparation of the financial statements.
D) All of the above are correct.
8) On the worksheet, the difference between the debits and credits in the income statement columns
would be the ending owner’s equity balance.
9) The debits equal credits on the adjusted trial balance columns of the worksheet.
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10) Provide the adjusting entries to account for the differences between the trial balance amounts and the
adjusted trial balance amounts for the accounts shown. Only a partial trial balance is provided. Use T
accounts to show the adjustments.
Trial Balance Adjusted Trial Balance
Debit Credit Debit Credit
Supplies 500 250
Prepaid Rent 1,100 300
Equipment 10,000 10,000
Accum. Depr. – Equip 3,000 3,400
Service Fees 1,200 1,200
Depreciation Expense 400
Telephone Expense 150 150
Salaries Expense 500 600
Rent Expense 800
Supplies Expense 250
11) Determine the ending owner’s equity of a business having a beginning owner’s equity of $10,500,
withdrawals of $1,300, and net income of $9,000.
$ ________
12) Show which columns would contain the adjusted balances by placing an “x” in the appropriate
column. Assume all accounts have normal balances.
Income Statement Balance Sheet
Debit Credit Debit Credit
Cash (example) ________ ________ x ________
Accounts Receivable ________ ________ ________ ________
Office Supplies ________ ________ ________ ________
Prepaid Rent ________ ________ ________ ________
Word Processing Equipment ________ ________ ________ ________
Accounts Payable ________ ________ ________ ________
M. Scott, Capital ________ ________ ________ ________
M. Scott, Withdrawals ________ ________ ________ ________
Word Processing Fees ________ ________ ________ ________
Office Salaries Expense ________ ________ ________ ________
Supplies Expense ________ ________ ________ ________
Accumulated Depreciation ________ ________ ________ ________
Rent Expense ________ ________ ________ ________
13) Define the expression accrued salaries.
4.3 Learning Objective 4-3
1) Accumulated Depreciation is found on which of the following financial statements?
A) Balance Sheet
B) Income Statement
C) Statement of Owner’s Equity
D) All of these answers are correct.
2) Depreciation Expense would be found on which of the following financial statements?
A) Balance Sheet
B) Income Statement
C) Statement of Owner’s Equity
D) Worksheet
3) Which of the following accounts would appear on the Balance Sheet?
A) Accumulated Depreciation
B) Depreciation Expense
C) Delivery Truck
D) Both B and C.
4) Which of the following accounts would NOT appear on the Balance Sheet?
A) Accumulated Depreciation
B) Rent Expense
C) Equipment
D) Cash
5) The Accumulated Depreciation will appear in which of the following worksheet statement columns?
A) The Income Statement debit
B) The Income Statement credit
C) The Balance Sheet debit
D) The Balance Sheet credit
6) All of the following are reasons to adjust the account balances at the end of the period, except:
A) to accurately report the assets on the balance sheet.
B) to report all revenues earned during the period.
C) to report all expenses incurred during the period.
D) to correct any errors made during the period.
7) Financial statements are prepared from the:
A) trial balance.
B) worksheet income and balance sheet columns.
C) adjusted trial balance.
D) ledger.
8) Which of the financial statements is prepared last from the worksheet?
A) Balance Sheet
B) Income Statement
C) Statement of Owner’s Equity
D) None of these answers is correct.
9) The ending figure for capital, used on the balance sheet, will be obtained from:
A) balance sheet credit column of the worksheet.
B) the statement of owner’s equity.
C) balance sheet debit column of the worksheet.
D) credit column of the income statement.
10) The inside columns on the financial statements are used to:
A) show debits.
B) show credits.
C) show subtotals.
D) show the Capital balance.
11) The beginning capital balance used on the Statement of Owner’s Equity is obtained from:
A) the worksheet in the balance sheet credit column.
B) the worksheet in the income statement credit column.
C) the amount calculated on the statement of owner’s equity.
D) the worksheet in the balance sheet debit column.
12) The amount for withdrawals, to be used on the Statement of Owner’s Equity, would be obtained from:
A) the worksheet in the balance sheet debit column.
B) the worksheet in the income statement credit column.
C) the worksheet in the income statement debit column.
D) the worksheet in the balance sheet credit column.
13) Debits must exceed credits on the Statement of Owner’s Equity.
14) Every amount needed for the income statement can be found in the debit column on the worksheet.
15) On the formal income statement, the left column is the debit column, and the right column is the
credit column.
16) For each account listed, identify the category it belongs to, the normal balance (debit or credit), and
the financial statement the account appears.
Account Category Normal Balance Financial Statement
0. Cash Asset Debit Balance Sheet
1. Depreciation Expense
2. Accumulated Depreciation
3 Wages Expense
4. Equipment
5. Office Supplies Expense
6. Wages Payable
7. Prepaid Insurance Expense
17) For each account listed, identify the category it belongs to, the normal balance (debit or credit), and
the financial statement in which the account appears.
Account Category Normal Balance Financial Statement
0. Cash Asset Debit Balance Sheet
1 Capital, Beginning
2. Salaries Expense
3. Salaries Payable
4. Accounts Receivable
5. Prepaid Insurance
6. Withdrawals
7. Service Fees Earned
8. Accounts Payable
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18) From the following data, make the following adjustments, and complete the worksheet for the month.
a. Depreciation Expense is $500.
b. Supplies remaining at end of period $75.
c. Prepaid Insurance balance $400, $100 has expired.
d. Wages for the 5-day work-week are $1,000, the month ended on a Wednesday.
Account Trial Balance Adjustments Adj. Trial Bal. Income Stmt Balance Sheet
DR CR DR CR DR CR DR CR DR CR
Cash 750
Accts. Receivable 400
Supplies 250
Prepaid Ins. 400
Equipment 7,000
Accts. Pay. 900
Capital 7,100
Fees Earned 900
Wages Expense 100
Totals 8,900 8,900
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19) Using the following data, make the adjustments, and complete the worksheet for one month.
a. Equipment costing $750 with a residual value of $150 has an expected life of 12 months.
b. Accrued salaries of $100.
c. Supplies ledger balance $900, supplies used $400.
Account Trial Balance Adjustments Adj.Trial Bal Income Stmt Balance Sheet
DR CR DR CR DR CR DR CR DR CR
Cash 1,600
Accts. Rec. 900
Supplies 900
Equipment 750
Accts. Payable 800
Capital 2,950
Withdrawals 200
Fees Earned 900
Sal. Expense 300
Totals 4,650 4,650
20) Given the income statement columns and the balance sheet columns of the worksheet, prepare an
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income statement for the month of October 31, 20XX, for the Riley company.
37
21) Given the income statement columns and the balance sheet columns of the worksheet, prepare a
balance sheet dated December 31, 200X, for Bear Company.
22) Discuss the benefits of the worksheet. Explain how the financial reports are prepared from the
worksheet.