1. a. Under cash-basis accounting, revenues are reported in the period in which cash is received and
3. Adjusting entries are necessary at the end of an accounting period to bring the ledger up to date.
5. Four different categories of adjusting entries include prepaid expenses (deferred expenses), unearned
10. a. The portion of the cost of a fixed asset deducted from revenue of the period is debited to
Depreciation Expense. It is the expired cost for the period. The reduction in the fixed asset
CHAPTER 3
THE ADJUSTING PROCESS
DISCUSSION QUESTIONS
3-1
CHAPTER 3 The Adjusting Process
PE 3–1A
PE 3–1B
PE 3–2A
PE 3–2B
PE 3–3A
PE 3–3B
PE 3–4A
PE 3–4B
PRACTICE EXERCISES
3-2
PE 3–5A
PE 3–5B
PE 3–6A
PE 3–6B
PE 3–7A
PE 3–7B
3-3
CHAPTER 3 The Adjusting Process
PE 3–8A
PE 3–8B
PE 3–9A
PE 3–9B
3-4
CHAPTER 3 The Adjusting Process
PE 3–10A
a.
Amount Percent Amount Percent
PE 3–10B
a.
Amount Percent Amount Percent
HEMLOCK COMPANY
For Years Ended December 31
Income Statements
2014 2013
Income Statements
For Years Ended December 31
CORNEA COMPANY
20132014
3-5
CHAPTER 3 The Adjusting Process
Ex. 3–1
1. Prepaid expense 5. Unearned revenue
Ex. 3–2
Accounts Receivable………………………
…
Normally requires adjustment (AR).
Ex. 3–3
Ex. 3–4
Ex. 3–5
EXERCISES
Account Answer
3-6
CHAPTER 3 The Adjusting Process
Ex. 3–6
Ex. 3–7
a. Insurance Expense 16,400
Ex. 3–8
Ex. 3–9
Ex. 3–10
3-7
CHAPTER 3 The Adjusting Process
Ex. 3–11
Ex. 3–12
Ex. 3–13
Ex. 3–14
Ex. 3–15
3-8
CHAPTER 3 The Adjusting Process
Ex. 3–17
a. Taxes Expense 21,600
Ex. 3–18
Ex. 3–19
Ex. 3–20
Ex. 3–21
Ex. 3–22
3-9
CHAPTER 3 The Adjusting Process
Ex. 3–23
Over- Under- Over- Under-
stated stated stated stated
1. Revenue for the year would be……………
…
$ 0 $23,250 $ 0 $ 0
Ex. 3–24
Ex. 3–25
Error (b)Error (a)
3-10
…
CHAPTER 3 The Adjusting Process
Ex. 3–26
1. Accounts Receivable 3
3-11
CHAPTER 3 The Adjusting Process
Ex. 3–27
1. The accountant debited Accounts Receivable for $5,000 but did not credit
The corrected adjusted trial balance is shown below.
Debit Credit
Balances Balances
Cash 7,500
Accounts Receivable 23,250
May 31, 2014
EVA’S LAUNDRY
Adjusted Trial Balance
3-12
CHAPTER 3 The Adjusting Process
Ex. 3–28
Ex. 3–29
a.
Amount Percent
Net sales $61,494 100.0%
Dell Inc.
3-13
CHAPTER 3 The Adjusting Process
Prob. 3–1A
1. a. Supplies Expense 4,680
Supplies 4,680
PROBLEMS
3-14
CHAPTER 3 The Adjusting Process
Prob. 3–2A
1. a. Accounts Receivable 9,150
Fees Earned 9,150
2. Fees Earned would be understated by $9,150; Wages Expense would be
3. Accounts Receivable would be understated by $9,150; total assets would be
3-15
CHAPTER 3 The Adjusting Process
Prob. 3–3A
1. a. Accounts Receivable 12,700
Fees Earned 12,700
2. Revenues…………………
…
$393,000
…
3-16
CHAPTER 3 The Adjusting Process
Prob. 3–4A
2014
Nov. 30 Supplies Expense 8,850
Supplies 8,850
Supplies used ($11,250 – $2,400).
3-17
CHAPTER 3 The Adjusting Process
Prob. 3–5A
1. a. Insurance Expense 1,800
Prepaid Insurance 1,800
Insurance expired ($7,200 – $5,400).
b. Supplies Expense 1,605
Supplies 1,605
3-18
CHAPTER 3 The Adjusting Process
Prob. 3–5A (Concluded)
2.
Debit Credit
Balances Balances
Cash 7,500
Salaries and Wages Payable 2,900
Monica Baker, Capital 221,000
Monica Baker, Drawing 15,000
October 31, 2014
DICKENS COMPANY
Adjusted Trial Balance
3-19