Questions and Answers
What is the adjusting entry for wages expense at Trotman's Variety Store?
Debit: Wages Expense: 2700; Credit: Wages Payable: 2700
What is the adjusting entry for office supplies expense at Trotman's Variety Store?
Debit: Office Supplies Expense: 675; Credit: Office Supplies: 675
What is the adjusting entry for rent receivable at Trotman's Variety Store?
Debit: Rent Receivable: 1120; Credit: Rent Revenue: 1120
What is the adjusting entry for depreciation expense at Trotman's Variety Store?
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What is the adjusting entry for insurance expense at Trotman's Variety Store?
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What is the adjusting entry for unearned rent revenue at Trotman's Variety Store?
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What is the adjusting entry for repair accounts receivable at Trotman's Variety Store?
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What should the adjusted trial balance for Hagadorn Company include for Accounts Receivable?
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Which account represents the amount of money owed for interest revenue that has been earned but not yet collected?
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Match each term with its definition:
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What adjusting entry is recorded for the rent collected in advance?
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For the Catena's Marketing Company, what was the total net income for the current year?
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What was the amount of dividends declared by Catena's Marketing Company?
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What is the annual reporting period for Elena's Traveling Veterinary Services, Inc.?
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What is the amount of interest expense to be reported for the loan borrowed by Elena's Company?
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How much should be reported for insurance expense on the Current year's income statement?
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Based on the adjusted trial balance, what is the total assets for Catena's Marketing Company?
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What is the closing balance for Prepaid Insurance at the end of the current year?
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What was the direction of effect on the balance sheet for wages earned by employees but unpaid at year-end for Dodie Company?
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How much is credited to shipping supplies for the current year?
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Study Notes
Adjusted Trial Balances
- Hagadorn Company's adjusted accounts at year-end include various elements such as Accounts Payable ($250), Accounts Receivable ($420), and Cash ($175).
- The trial balance summarizes debits and credits across different account types, with specific totals for expenses such as Salaries Expense ($640) and Sales Revenue ($2,400).
Revenue Recognition Terminology
- Deferred Revenue: Service revenue collected but not yet earned ($1,000).
- Accrued Revenue: Interest earned but not received ($550).
- Accrued Expense: Unpaid and unrecorded wages ($5,600).
- Deferred Expense: Office supplies purchased with some remaining at year-end ($100 of $700 total).
Adjusting Entries for Catena's Marketing Company
- Adjusting entries reflect revenue recognition and expenses incurred, entailing consideration of cash flow timings.
- For rent collected in advance, $1,200 is adjusted to reflect earned revenue over the period ($300 recognized).
- Depreciation expense for machinery recorded as $3,200.
- Insurance expense adjustment reflects a two-year premium with a pro-rated expense of $1,250 recognized.
Catena's Financial Statements
- Income Statement summarizes revenues ($38,500) and key operating expenses ($31,430), revealing an Operating Income of $7,070 and a Net Income after taxes of $5,270.
- Statement of Stockholder's Equity highlights changes in stock and retained earnings, ending with Total Equity at $10,370.
- Balance Sheet outlines total assets ($20,490), liabilities ($10,120), and stockholders' equity, confirming the accounting equation is balanced.
Financial Ratios
- Total Asset Turnover for Catena calculated using sales relative to average total assets, yielding a ratio of 2.11, signifying efficient asset utilization.
Adjustments for Dodie Company
- Unpaid wages at year-end ($4,000) and earned but uncollected interest ($1,500) both necessitate adjusting entries to maintain accurate records.
Adjustments for Elena's Veterinary Services
- Insurance expense recognized annually with $5,000 recognized as interest expense for a $60,000 loan.
- Utilities expense of $360 recorded for services rendered without prior payment.
Adjustments for A+T Williamson Company
- Insurance premium adjustments lead to an Insurance Expense of $600 recognized.
- The reduction in Shipping Supplies Expense results in $68,000 due to purchases and remaining supplies.
Trotman's Variety Store Adjustments
- Wages earned but unpaid require an entry of $2,700 reflecting accrued expenses.
- Office Supplies Adjustment shows $675 expense recognized from total purchases versus year-end counts.
- Rent adjustment for unpaid amounts totaling $1,120 reflects deferred revenues while accrued depreciation and insurance expenses align with actual usage.
Transaction Classifications
- Categorization of transactions into deferred and accrued revenues/expenses helps to clarify accounting practices.
- Understanding the nature of each type of transaction aids in accurately preparing adjusting entries and maintaining financial integrity in reporting.
Adjusting Entries Summary
- Essential for accurate representation of financial situations at year-end, ensuring compliance with accounting standards and correct profit reporting.
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Description
Test your knowledge of key accounting concepts with these flashcards based on Chapter 4. Review adjusted accounts, balances, and important terms relevant to year-end accounting figures. Perfect for reinforcing your understanding prior to exams or quizzes.