Accounting: Adjusting Journal Entries

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Questions and Answers

What is the correct adjusting entry for supplies on hand at 12/31/10?

  • Debit Supplies for $400, credit Supplies Expense for $400.
  • Debit Supplies for $600, credit Supplies Expense for $600.
  • Debit Supplies Expense for $600, credit Supplies for $600. (correct)
  • Debit Supplies Expense for $400, credit Supplies for $400.

What is the adjusting entry for insurance policy on December 31?

  • Debit Insurance Expense for $1,200, credit Prepaid Insurance for $1,200. (correct)
  • Debit Prepaid Insurance for $3,600, credit Insurance Expense for $3,600.
  • Debit Insurance Expense for $3,600, credit Prepaid Insurance for $3,600.
  • Debit Prepaid Insurance for $1,200, credit Insurance Expense for $1,200.

What is the adjusting entry for office equipment depreciation?

  • Debit Depreciation Expense for $1,000, credit Accumulated Depreciation for $1,000. (correct)
  • Debit Accumulated Depreciation for $1,000, credit Office Equipment for $1,000.
  • Debit Depreciation Expense for $1,000, credit Office Equipment for $1,000.
  • Debit Office Equipment for $1,000, credit Accumulated Depreciation for $1,000.

What is the purpose of adjusting entries for supplies?

<p>To match the cost of supplies with the revenue earned during the period. (B)</p> Signup and view all the answers

What is the purpose of adjusting entries for insurance policy?

<p>To allocate the cost of insurance over the period benefited. (B)</p> Signup and view all the answers

What is the purpose of adjusting entries for depreciation?

<p>To allocate the cost of asset over its useful life. (A)</p> Signup and view all the answers

What is the correct adjusting entry for the amount of supplies used up in November?

<p>Debit Supplies Expense and credit Supplies (B)</p> Signup and view all the answers

What is the effect of the adjusting entry on retained earnings and stockholders' equity?

<p>Retained earnings and stockholders' equity will decrease (B)</p> Signup and view all the answers

What is the correct account to debit for the insurance used during the month?

<p>Insurance Expense (B)</p> Signup and view all the answers

What is the purpose of the adjusting entry for the insurance used during the month?

<p>To recognize the expense incurred during the month (C)</p> Signup and view all the answers

What is the balance in the Prepaid Insurance account after the adjusting entry?

<p>$2,770 (C)</p> Signup and view all the answers

What type of account is Prepaid Insurance?

<p>Asset account (B)</p> Signup and view all the answers

What is the result of improper accrual of prepaid insurance?

<p>Assets and expenses will be understated. (D)</p> Signup and view all the answers

What is the correct adjusting entry on December 31, 2010, for the insurance policy?

<p>Debit to Insurance Expense $4,500 and credit to Prepaid Insurance $4,500. (D)</p> Signup and view all the answers

How much cash was paid for wages during 2010?

<p>$52,950 (D)</p> Signup and view all the answers

What is the adjusting journal entry to be made at the end of the period for supplies?

<p>Debit to Supplies Expense $1,000 and credit to Supplies $1,000. (D)</p> Signup and view all the answers

What is the adjusting entry on December 31, 2010, for the unearned rent?

<p>Debit to Unearned Rent $1,200 and credit to Rent Revenue $1,200. (B)</p> Signup and view all the answers

What is the purpose of making adjusting entries?

<p>To match revenues with expenses. (A)</p> Signup and view all the answers

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