What i, Suppose the income statement for Goggle Company reports $95 of net income, after deducting depreciation of $35. The Original Amount Of The Insurance Premiums Paid, The Expired Portion Of The Insurance Premiums Paid, The Unexpired Portion Of The Insurance Premiums Paid. Fixed manufacturing overhead costs deferred in inventory under absorption costing amounted to $20,000. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Copyright 2012 - 2023 | Accounting For Management. , $11,000 on the balance sheet $56,700 b. What is the net income, after being corrected? The bank prepares monthly financial statements at the end of each calendar We now offer 10 Certificates of Achievement for Introductory Accounting and Bookkeeping. (D) actual or expected cash outflows. Identify the effects on both the balance sheet and the income statement of a company using the LIFO inventory method instead of the FIFO method over a substantial time period when prices of the inventory items are continually rising. On average, the, A company has $74,000 in inventory at the beginning of the accounting period and $67,000 at the end of the accounting period. here is going to be a swim competition at the high school. On average, th, Assume that a firm reports a net income of $82,000 prior to making adjusting entries for the following items: Expired rent - $6,200 Depreciation expense - $7,400 Supplies used - $2,800. Office Supplies Expense = Beginning Balance + Purchases - Ending Balance = $240 + $5,200 - View the full answer Supplies are recorded as a(n) ______ when purchased. 35% b. Adjusting entries can be divided into the following four types. a, A business is using LIFO when FIFO should have been used during an inflationary period. a) The income statement allows for the allocation of the fixed expenses into the inventory value. The reason is that only the amount that has been earned can be included in December's revenues. (Check all that apply.) Fittingly, little Charon is named after a dreaded character in Greek myth, the ferryman who rowed the dead into the underworld. The depreciation adjustment uses a contra-account rather than reducing the asset accounts directly. If a set includes terms that have multiple definitions or answers, you can change grading settings to require one or all . Use the following information to answer questions 48 - 53: 325 Operating expenses ? Unfortunately the accounting software cannot compute the amounts needed for the adjusting entries. d. expensed in the period the product is sold. XYZ Insurance Co. recorded the $2,400 receipt as of December 1 with a debit to the current asset Cash and a credit to the current liability Unearned Revenues. Accumulated depreciation Which of the following accounts found on an unadjusted balance typically require adjusting entries? Since the expense and the payable occurred in December, the company needs to accrue the expense and liability as of December 31 with the following adjusting entry: Under the accrual method of accounting, the amounts received in advance of being earned must be deferred to a liability account until they are earned. c. variable costs. The adjusting entry to record interest owed on obligations at the end of the accounting period includes a debit to ______. What is the sales revenue? $4,900 b. Prepaid expenses, such as Prepaid Rent, should be ______ by the benefits that were used up during the accounting period. 25% c. 30% d. 15%. Adjusting entries made at the end of an accounting period accomplishes all of the following except: A. Updating liability and asset accounts to their proper balances. Revenues are: a. the cost of assets consumed during the period. Assets understated Dr. Assets 3. As of December 31, the unadjusted balance in Deferred Revenue contains $5,600 for unredeemed gift cards. Net income, as corrected, is _____. How will these transactions affect the adjustments at the end of the period? The certificates include Debits and Credits, Adjusting Entries, Financial Statements, Balance Sheet, Income Statement, Cash Flow Statement, Working Capital and Liquidity, Financial Ratios, Bank Reconciliation, and Payroll Accounting. On December 3, it purchased $1,500 of supplies on credit and recorded the transaction with a debit to the current asset Supplies and a credit to the current liability Accounts Payable. $87,300 b. Use the following information to answer questions 42 - 47: Balance sheet. b. expensed in the period the product is sold. How many accounts are involved in the adjusting entry? a. Accrued revenues On January 2, the following reversing entry is recorded in order to remove the accrual-type adjusting entry of December 31: The reversing entry removes the liability established on December 31 and also puts a credit balance in the Repairs Expense account on January 2. all expenses incurred are reported on the income statement all revenues earned are reported on the income statement all assets are reported at their proper balances on the balance sheet all liabilities are reported at their proper balances on Adjusting entries are required to ensure ______. Zero is the correct amount because the expense of $6,000 belonged in December and was reported in December as the result of the December 31 adjusting entry. Revenues on long-term construction contracts. The amount that is not earned as of December 31 must be reported as a liability on the December 31 balance sheet. Assume that the com, The income statements for four consecutive years for Colca Company reflected the following summarized amounts: 2011 2012 2013 2014 Sales revenue $60,000 $63,000 $65,000 $68,000 Cost of goods sold 39,000 43,000 44,000 46,000 Gross profit 21,000 20,000 21,0, The purpose of recording depreciation on productive assets is to: a. reflect the decline in the market value of the assets each period b. reduce income when the company has an exceptionally profitable year c. allocate the original cost of productive asset. Adjusting entries are used to match the revenues and expenses during the accounting period. After the adjustments have been recorded, the adjusted balance in the Prepaid Rent account represents the ______. Prep for a quiz or learn for fun! When the costs expire (or are used up) they become expenses. Indication of CQ. c. expense of the period in which the acquisition occurs. What is the amount of the debit and the credit? The certificates include Debits and Credits, Adjusting Entries, Financial Statements, Balance Sheet, Income Statement, Cash Flow Statement, Working Capital and Liquidity, Financial Ratios, Bank Reconciliation, and Payroll Accounting. The ending balance in the account Deferred Revenues (or Unearned Fees) should report which of the following? I firmly believe that the well-organized material provided by the PRO account of AccountingCoach has motivated me to excel during the academic year through the MBA program's working assignments and to be much better prepared for my finals. They can however be made at the end of a quarter, a month or even at the end of a day depending on the accounting requirement and the nature of business carried on by thecompany. Accordingly, the cost of sales in interim periods should: a) Be determined using the gross profit method. e. Both a. and d. Mathematics You applied for a loan. Supplies on the balance sheet of $300 Which of the following account balances will typically be reduced as a result of adjusting entries? For example, a business needs to report an expense that has occurred even if a supplier's invoice has not yet been received. If a business has earned $5,000 of revenues, but they are not recorded as of the end of the accounting period, the accrual-type adjusting entry will be as follows: Under the accrual method of accounting, the financial statements of a business must report all of the expenses (and related payables) that it has incurred during an accounting period. During the year, it paid $700 of the amount it owed for supplies. What type of accounts are Deferred Revenues and Unearned Revenues? Revenues are: (A) the cost of services used during the period. Exclude explanations from any journal entries.) The depreciation adjusting entry to record the depreciation expense estimate for the accounting period requires a credit to which account? What is the author implying to the reader? Some accounting software will allow you to indicate the adjusting entries you would like to have reversed automatically in the next accounting period. Reversing entries will be dated as of the first day of the accounting period immediately following the period of the accrual-type adjusting entries. Accrual-type adjusting entries are needed because some transactions had occurred but the company had not entered them into the accounts as of the end of the accounting period. stockholders' equity will increase The following questions pertain to the adjusting entry that the bank will be making Adjusting entries are usually made at the end of an accounting period. $4,600 c. $4,500 d. $5,000, A company with a break-even point at $900,000 in sales revenue and had fixed costs of $225,000. Thecompany will record this accrued revenue by making the following adjusting entry: After preparing all necessary adjusting entries, they are either posted to the ledger accounts or directly added to the unadjusted trial balance for the purpose of preparingadjusted trial balance of the company. See answer Advertisement ranijoshijj97 Answer: a. cultures c. sales discount ac. The company prepares financial It is known as accruing the uncollected revenue. Something similar to Situation 2 occurs when a company purchases equipment to be used in the business. Account adjustments are entries out of internal transactions within a business, which are entered into the general journal at the end of an accounting period. statements at the end of each calendar month. [As the prepaid insurance premiums expire an adjusting entry should be written to credit the asset Prepaid Insurance and debit Insurance Expense.]. D. understated for. Copyright 2023 AccountingCoach, LLC. ], The amount owed for accrued expenses is reported in a liability account such as Accrued Expenses Payable. The company has a bank loan and has incurred (but not recorded) interest expense of $2,500 for the year ended December 31, 2017. b. Sequential numbering Adjusting entries (also known as end of period adjustments) are journal entries that are made at the end of an accounting period to adjust the accounts to accurately reflect the revenues and expenses of the current period. c. Expired costs are recognized as liabiliti, Schedules of Cost of Goods Manufactured and Cost of Goods Sold; Income Statement The following data from the just completed year are taken from the accounting records of Mason Company: Sales $524,00. Accrued expeneses, Accounts Before Adjustment Adjusting Entry Only to correct errors in the initial recording of business transactions. Requirement 1. Contra asset accounts will have credit balances. $215 Sales ? The company must pay the interest on January 2, 2018 Expert Answer Adjusting Entries are as follows: 1. For December 27 through 31, the company should have an asset Prepaid Insurance or Prepaid Expenses of $6,000. As of December 31, the end of the accounting period, $700 of salaries and wages owed to employees have been incurred but not paid. What kind of evidence supports that Italians think the immigration laws are unfair? $300,000 b. Smart grading uses natural language processing to understand the meaning of your answers and gives you credit for understanding the concept, not the exact way it's worded. Supplies------Amount remaining and reported on the balance sheet. Examples of fixed assets are buildings, machinery, equipment, vehicles, furniture, and other constructed assets used in a business and having a useful life of more than one year. $11,000 on the balance sheet. Use the following information to answer questions 36 - 41: However, adjusting entries have not been made at the end of the period for supplies expense of $2,700 and accrued salaries of $1,300. The following is Arkadia Corporation's contribution format income statement for last month: Sales $1,200,000 ; Variable costs 800,000 ; Contribution Margin 400,000 ; Fixed costs 300,000 ; Net Operat, A partial listing of a company's accounts are listed below: Sales revenue $190,000 Depreciation expense $20,000 COGS $84,000 Rent expense $8,000 Cash $1,000 Unearned revenue $2,000 Building $200,000 Wage expense $30,000 Accumulated depreciation $44,000 In, A company has three product lines, one of which reflects the following results: Sales $224,400 Variable expenses $131,791 Contribution margin $93,555 Fixed expenses $133,727 If this product line is eliminated, 60% of the fixed expenses can be eliminated a, In the variable costing period's income statement, where should the period's fixed costs be included? month. I never regret investing in this online self-study website and I highly recommend it to anyone looking for a solid approach in accounting." Which of the following will be included in the adjusting entry to accrue interest income or interest revenues? What type of accounts are Interest Receivable and Fees Receivable? What was the company's estimated cost of go, Geran Company purchased merchandise inventory with an invoice price of $5,000 and credit terms of 2/10, n/30. The adjusting entry contained a debit to Insurance Expense in the amount of ______ and a credit to Prepaid Insurance in the amount of ______ The remaining balance in the Prepaid Insurance account after the adjustment was $________. A product cost is: a. expensed in the period in which it is manufactured. For example, the bill for the insurance on the company's vehicles might be $6,000 and covers the six-month period of January 1 through June 30. Adjusting entries are prepared when the earned revenues and incurred expenditures during the period are not recorded in the books of accounts. Depreciation expense for 2016 overstated by $1,100 What is the effect of the errors on 2016 net income before taxes? Last year, $4,000 in fixed manufacturing overhead costs were released from inventory under absorption costing. (B) the cost of assets consumed during the period. Net Income on the income statement will decrease. An expense paid in advance is called: 3. Adjusting entries are required every time a company prepares financial statements. Deferred revenues indicate that a company has received money from a customer before it has been earned. In order for a company's financial statements to include these transactions, accrual-type adjusting entries are needed. A company has three product lines, one of which reflects the following results: Sales $215,000 Variable expenses 125,000 Contribution margin 90,000 Fixed expenses 120,000 Net loss $ (30,000) If this, Lasorsa Corporation manufactures a single product. $90,000 c. $88,700, Complete the following data taken from the condensed income statements for merchandising Companies A, B, and C. Company A Company B Company C Net income $315 $ ? (Do not round intermediate, The condensed income statement for a business for the past year is as follows: Product T U Sales $660,000 $320,000 Less variable costs 540,000 220,000 Contribution margin $ 120,000 $100,000 Less fixed, The Draper Company Records these journal entries: Depreciation $40 Accrued Expense $12 Earned portion of Unearned Revenue $17 What is the net effect of these journal entries on the following items? allocated to future accounting periods based on the value of the benefit used during the period. b. The total salary payable for the month of January is$8,500. c. Assets owned by a business. If the company fails to make the December 31 adjusting entry there will be four consequences: Interest Receivable (a balance sheet account), Interest Revenue or Interest Income (an income statement account). 56 terms. Farley Macroeconomics Test 3. b. is made when a company sustains a loss in one period and reverses the effect with a profit in the next period. Net income will be too high in the following period, Paragon Company's controller prepared the following budgeted income statement for the coming year: Sales $490,000 Total variable cost 302,950 Contribution margin $187,050 Total fixed cost 64,800 Operating income $122,250 Required: 1. $84,200 b. connections Let's assume the equipment is acquired, paid for, and put into service on May 1. The net income reported on the income statement is $85,000. Other Quizlet sets. 125 ? If XYZ Insurance Co. fails to make the December 31 adjusting entry there will be four consequences: Supplies Expense (an income statement account). A product cost is: a. shown with operating expenses on the income statement. Companies that prepare their financial statements in accordance with United States Generally Accepted Accounting Principles (US-GAAP) and International Financial Reporting Standards (IFRS) usually prepare some adjusting entries at the end of each accounting period. An adjusting entry to accrue revenue earned but not received at the end of an accounting period includes which type of entry to a balance sheet asset account? Company had the following account balances at the end of the current accounting period: Beginning inventory $73,000 Net purchases 58,250 Net sales revenue 87,500 The normal gross profit for the company is $45%. Self - personal adjustment to other cultures [Stockholders' equity appears on the right side of the accounting equation. This error will cause the: a. net income for the period to be overstated. d. revenue of the p. The net income reported on the income statement is $68,000. All revenue received or all expenses paid in advance cannot be reported on the income statement of the currentaccounting period. Expenses understated Dr. Prepaid expenses Reason: Jhontz2. b. fixed costs. . Supplies should be ______ and Supplies Expense should be ______ for supplies used during the period. The company analyzes each account in the trial balance to determine whether it is complete and up to date for financial statement purposes. Which of the following is/are the purpose of adjusting entries? Which account will need an adjusting entry to adjust for the amounts used during the period that were paid for in advance? To apply the matching principle C. To properly reflect the the correct net income D. To make the equation A=L+OE more accurate E. All of the above 2. Example 1. b. net income for the period to be understated. Adjusting for services provided ______. COLUMNI \hspace{1cm}COLUMN II \hspace{1cm}COLUMN III, ______\hspace{1cm} + normal\hspace{1cm} = _________ Receivables normally have debit balances. In other words, prepaid expenses are unexpired costs. The adjusting entry to record wages incurred but not yet recorded includes a credit to ______. Journalize the adjusting entries. Adjusting entries are made at the _________ of the accounting period, while daily transactions are made throughout the accounting period. c. report revenue when received. Which of the following will be included in the adjusting entry to accrue interest expense? Which is the best evidence for the idea that immigrants help the United States economy?

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