14) Which of the following will cause the adjusted trial balance to be out of balance?
A) An adjusting entry to record the cost of supplies used was recorded as a $200 debit to
Supplies expense and a $200 debit to Supplies.
B) An adjusting entry to record the amount of prepaid insurance that had expired was recorded as
a $100 debit to Insurance expense and a $100 credit to Prepaid insurance. However, the $100
amount of the adjusting entry was wrong because $300 of insurance had actually expired.
C) Transactions were not posted from the journal to the ledger.
D) An adjusting entry to record $500 of supplies that were used was recorded as a debit to
Supplies and a credit to Supplies expense.
15) B. Row, Inc. issued a 12% note on December 1, 2011 with interest and principal due on
January 31, 2012. If the Interest payable account has a zero balance, it must be the case that the
________.
A) debits do not equal the credits on the postclosing trial balance
B) adjusting entries have not yet been recorded
C) debits do not equal the credits in the journal
D) temporary accounts have been closed
16) Which of the following events will cause the adjusted trial balance to be out of balance?
A) An adjusting entry to record interest expense was recorded as a debit to Interest receivable
and a credit to Interest income.
B) An adjusting entry to record interest expense was recorded as a debit to Interest receivable
and a debit to Interest expense.
C) A credit sale made on the last day of the year was not recorded at all.
D) An adjusting entry to record the amount of prepaid insurance that had expired was recorded
as a $100 debit to Insurance expense and a $100 credit to Prepaid insurance. However, the $100
amount of the adjusting entry was wrong because $300 of insurance had actually expired.
17) Adjustments are usually made ________.
A) after the postclosing trial balance has been prepared
B) at the end of the accounting period after the financial statements are prepared
C) during the accounting period when accruals get too big
D) at the end of the accounting period before financial statements are prepared
18) Ink, Inc. has the following accounts with normal balances on its adjusted trial balance after
its first year of business.
Cash
$ 400
Accounts receivable
200
Insurance expense
100
Equipment
800
Accumulated depreciation
100
Depreciation expense
100
Sales
1,000
Wages expense
400
Common stock
1,000
Dividends
100
How much is the debit column total on the adjusted trial balance?
A) $2,600
B) $2,400
C) $2,100
D) $1,400
19) Adjusting entries will always include either a debit to a(n) ________ account or a credit to
a(n) ________ account.
A) expense; revenue
B) cash; revenue
C) revenue; expense
D) expense; cash
20) Ink, Inc. has the following accounts with normal balances on its adjusted trial balance after
its first year of business.
Cash
$ 800
Unearned revenue
300
Insurance expense
200
Equipment
800
Accumulated depreciation
100
Depreciation expense
100
Sales
1,000
Wages expense
400
Common stock
1,000
Dividends
100
How much is the credit column total on the adjusted trial balance?
A) $2,600
B) $2,400
C) $2,300
D) $2,200
21) A Cut Above, Inc. has the following accounts with normal balances on its December 31,
2011 adjusted trial balance after its first year of business.
Cash
$ 400
Accounts receivable
200
Insurance expense
200
Equipment
800
Accumulated depreciation
100
Depreciation expense
100
Service revenue
1,000
Wages payable
100
Wages expense
300
Supplies expense
100
Common stock
1,000
Dividends
100
A Cut Above, Inc.’s net income for the year ended December 31, 2011 equals ________.
A) $600
B) $500
C) $400
D) $300
22) Adjusting journal entries must be recorded prior to preparing an unadjusted trial balance.
23) The adjusting entry to record supplies used includes a debit to Supplies expense and a credit
to Supplies.
24) A typical adjusting entry to record includes a debit to Cash and a credit to Sales.
25) Adjusting journal entries are made at the beginning of each period.
26) Adjusting journal entries are made at the end of each period before closing entries are
recorded.
27) At year end December 31, 2010, McToil, Inc. owes its employees $15,000 for work
performed in 2010. Payday is not until the first week in January 2011. Record the adjusting entry
in the T-accounts provided.
28) On November 1, 2011, Delectable Edibles, Inc. received $12,000 in advance for services to
be performed evenly over the next 12 months. Record (a) the cash received on November 1,
2011 and (b) the adjusting entry at December 31, 2011 in the T-accounts below:
12,000(a)
2,000(b)
29) On April 3, 2011, Tanks a Lot, the monthly magazine for tropical fish fanciers, received
payment for one-year subscriptions from twenty new subscribers. A subscription to Tanks a Lot
costs $24 for twelve monthly issues. All twenty new subscriptions will begin May 1, 2011.
a. Record the cash received April 3, 2011.
Date
Transaction
Debit
Credit
b. Tanks a Lot makes its adjusting entries only once a year. Prepare the adjusting journal entry at
December 31, 2011.
Date
Transaction
Debit
Credit
30) On December 31, 2011, the unadjusted trial balance shows Supplies of $800. However, only
$100 of supplies remains. Prepare the adjusting journal entry at December 31, 2011.
Date
Transaction
Debit
Credit
Transaction
Debit
Credit
Date
Transaction
Credit
Date
Transaction
Credit
31) On January 1, 2011, Vango,Inc. bought a delivery van that cost $25,000, expecting to use the
van for five years with no residual value. Prepare the adjusting journal entry at December 31,
2011 to record one year’s use of the van, using straight-line depreciation.
Date
Transaction
Debit
Credit
32) On December 31, 2011, the unadjusted trial balance for Tim’s Ware, Inc. shows Prepaid rent
of $1,200. This represents the amount the company paid in August for a one-year lease effective
September 1, 2011. Tim’s Ware does not prepare monthly financial statements, so it makes
adjusting entries only once a year. Prepare the adjusting journal entry at December 31, 2011.
Date
Transaction
Debit
Credit
Transaction
Debit
Credit
33) On November 1, 2011, Miracles, Inc. borrowed $30,000 on 12% note with both interest and
principal due on May 1, 2012. Prepare the adjusting entry to record interest for the year ended
December 31, 2011.
Date
Transaction
Debit
Credit
Transaction
Debit
Credit
Transaction
Debit
Credit
34) On September 1, 2011, Miracles, Inc. borrowed $30,000 on 12% note with both interest and
principal due on June 1, 2012. Post the adjusting entry for the year ended December 31, 2011 in
the T-accounts below:
35) Mac, Inc. purchased equipment on December 1, 2011 in exchange for a 4-month, 9%,
$120,000 note. The equipment has an estimated useful life of four years and $0 residual value.
Record (a) the purchase of the equipment December 1, 2011 and the adjusting entries for (b)
straight-line depreciation and (c) interest for the month-ended December 31, 2011 in the T–
accounts provided.
Equipment
Notes payable
Depreciation expense
Accumulated depreciation
Interest payable
Interest expense
36) MT Pockets, Inc.’s unadjusted trial balance and additional information are below:
MT Pockets, Inc.
Unadjusted Trial Balance
December 31, 2011
Debit
Credit
Cash
$ 40,000
Accounts receivable
30,000
Truck
120,000
Accumulated depreciation
$ 0
Note payable
60,000
Interest payable
0
Salary payable
0
Common stock
90,000
Service revenue
100,000
Interest expense
0
Salary expense
60,000
Depreciation expense
0
Totals
$250,000
$250,000
The truck was purchased on January 1, 2011 and has an estimated useful life of ten years and $0
residual value. MT Pockets uses straight-line depreciation. The $60,000, 6%, two-year note was
issued on February 1, 2011. On December 31, 2011, MT Pockets owes its employee $10,000,
which will be paid in January 2012.
A. Record MT Pockets’ year-end adjusting journal entries using the information above.
Date
Transaction
Debit
Credit
12/31/11
_________________________________________________________
12/31/11
_________________________________________________________
12/31/11
B. Using the information MT’s Unadjusted Trial Balance, prepare MT Pockets’ adjusted trial
balance.
MT Pockets, Inc.
Adjusted Trial Balance
December 31, 2011
Debit
Credit
Cash
Accounts receivable
Truck
Accumulated depreciation
Note payable
Interest payable
Salary payable
Common stock
Service revenue
Salary expense
Interest expense
Depreciation expense
Totals