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Under a periodic inventory system, the adjustment for merchandise inventory is made in ________ steps.

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On Oct 1, 2019, a firm purchased a 1-year insurance policy for $2,400 and paid the full premium in advance. The adjustment needed on December 31, 2019, to report the amount of insurance that had expired, would be:


A) a debit to Insurance Expense for $1,800 and a credit to Prepaid Insurance for $1,800.
B) a debit to Insurance Expense for $2,400 and a credit to Cash for $2,400.
C) a debit to Insurance Expense for $600 and a credit to Prepaid Insurance for $600.
D) a debit to Prepaid Insurance for $600 and a credit to Insurance Expense for $600.

E) A) and B)
F) A) and C)

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During the year, Spirit Fun had net credit sales of $800,000. Past experience shows that 1.5 percent of the firm's net credit sales will be uncollectible. Determine the adjusting entry needed to recognize the estimated expense for these uncollectible accounts.


A) debit Uncollectible Accounts Expense $12,000 and credit Accounts Receivable $12,000.
B) debit Uncollectible Accounts Expense $12,000 and credit Allowance for Doubtful Accounts
$12,000.
C) debit Uncollectible Accounts Expense $120,000 and credit Allowance for Doubtful Accounts
$120,000.
D) debit Allowance for Doubtful Accounts $12,000 and credit Accounts Receivable $12,000.

E) A) and B)
F) A) and C)

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Rose Bush Nursery purchased a delivery truck for $40,000. The truck is expected to have a useful life of 5 years and a residual value of $2,800. The company uses the straight-line method of depreciation. If the truck was purchased on June 1, 2019, what is the amount of depreciation expense for the truck for one full year?


A) $3,100
B) $4,340
C) $2,800
D) $7,440

E) B) and D)
F) A) and B)

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The journal entry to record interest that has been earned but not yet received includes a debit to Interest Receivable and a credit to Interest Income.

A) True
B) False

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Determine the account and amount to be debited and the account and amount to be credited for the following adjustment. The Supplies account has a balance of $2,500. On December 31, 2019, an inventory of supplies showed that items costing $625 were on hand.

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Debit Supplies Expen...

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Prepaid Advertising has a debit balance in the Trial Balance section of the worksheet of $1,500 and a credit entry of $500 in the adjustments section of the worksheet, the balance of Prepaid Advertising in the Adjusted Trial Balance section of the worksheet is a


A) $1,000 credit.
B) $500 debit.
C) $1,500 debit.
D) $1,000 debit.

E) A) and D)
F) A) and C)

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Determine the account and amount to be debited and the account and amount to be credited for the following adjustment. During December, the firm received $6,000 in fees in advance and properly recorded the amount as Unearned Fees. An analysis shows that $2,000 applies to services provided in December.

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Debit Unearned Fees,...

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On April 1, 2019, a firm accepted a 6-month, 10 percent note for $1,800 from a customer with an overdue balance. The accrued interest recorded for this note for the year ended June 30, 2019, is


A) $180.
B) $90.
C) $15.
D) $45.

E) All of the above
F) A) and D)

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Determine the account and amount to be debited and the account and amount to be credited for the following adjustment. On December 31, 2019, the firm owed wages totaling $4,300.

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Debit Wages Expense,...

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Under the periodic inventory system, the journal entry to record the ending merchandise inventory in the books includes a ________ to the Merchandise Inventory account.

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Match the description with the accounting terms.

Premises
Long-term assets that are used in the operation of a business and that are subject to depreciation (except for land, which is not depreciated)
A form used to list the volume and type of goods a firm has in stock
Another term for unearned income
Expenses that are paid for and recorded before they are used, such as rent or insurance
The amounts entered in the Adjusted Trial Balance section of the worksheet
Expense items that relate to the current period but have not yet been paid and do not yet appear in the accounting records
Another term for prepaid expenses
A system of accounting by which all revenues and expenses are matched and reported on financial statements for the applicable period, regardless of when the cash related to the transaction is received or paid
Income that has been earned but not yet received and recorded
The difference between the debit and credit columns of the Income Statement and the debit and credit columns of the Balance Sheet on the worksheet.
Income received before it is earned
Responses
Accrual basis
Accrued expenses
Accrued income
Deferred expenses
Deferred income
Inventory sheet
Net income or Net loss
Prepaid expenses
Property, plant, and equipment
Unearned income
Updated account balances

Correct Answer

Long-term assets that are used in the operation of a business and that are subject to depreciation (except for land, which is not depreciated)
Property, plant, and equipment
A form used to list the volume and type of goods a firm has in stock
Inventory sheet
Another term for unearned income
Deferred income
Expenses that are paid for and recorded before they are used, such as rent or insurance
Prepaid expenses
The amounts entered in the Adjusted Trial Balance section of the worksheet
Updated account balances
Expense items that relate to the current period but have not yet been paid and do not yet appear in the accounting records
Accrued expenses
Another term for prepaid expenses
Deferred expenses
A system of accounting by which all revenues and expenses are matched and reported on financial statements for the applicable period, regardless of when the cash related to the transaction is received or paid
Accrual basis
Income that has been earned but not yet received and recorded
Accrued income
The difference between the debit and credit columns of the Income Statement and the debit and credit columns of the Balance Sheet on the worksheet.
Net income or Net loss
Income received before it is earned
Unearned income

On January 1, 2019, a firm purchased machinery for $19,000. Depreciation expense for the year ending December 31, 2019, given the straight-line method, a 8-year useful life, and a salvage value of $2,000, is


A) $2,125.
B) $2,000.
C) $2,400.
D) $2,375.

E) None of the above
F) A) and D)

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A

Depreciation Expense has a debit balance in the Trial Balance section of the worksheet of $2,200 and a debit of $200 in the adjustments section of the worksheet, the balance of Depreciation Expense in the Adjusted Trial Balance section of the worksheet is a


A) $200 debit.
B) $2,400 credit.
C) $2,000 debit.
D) $2,400 debit.

E) A) and B)
F) C) and D)

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If a company uses the periodic inventory system, purchases of merchandise are


A) credited to Merchandise Inventory.
B) credited to Sales.
C) debited to Purchases.
D) debited to Merchandise Inventory.

E) A) and C)
F) A) and D)

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Determine the account and amount to be debited and the account and amount to be credited for the following adjustment. During December, the firm received $12,000 in fees in advance and properly recorded the amount as Unearned Fees. An analysis shows that $4,000 applies to services provided in December.

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Debit Unearned Fees, $4,000; credit Fees Earned, $4,000

Hugh Morris Company pays weekly wages of $15,000 every Friday for a five day week ending on that day. If the last day of the year is on Tuesday, the adjusting entry to record the accrued wages is:


A) debit Wages Expense $15,000; credit Cash $15,000
B) debit Wages Expense $9,000; credit Wages Payable $9,000
C) debit Wages Expense $6,000; credit Drawing $6,000
D) debit Wages Expense $6,000; credit Wages Payable $6,000

E) B) and C)
F) A) and C)

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The procedure that most nearly attains the objective of matching revenues and expenses to specific accounting periods is called the________ basis of accounting.

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On July 31, 2019, after one month of operation, the general ledger of Dakota Consulting contained the following accounts and balances. The firm adjusts losses from uncollectible accounts only at the end of the fiscal year. Monthly adjustments are listed below. Prepare the Trial Balance, Adjustments, and Adjusted Trial Balance sections of a worksheet.  ACCOUNT  BALANCE  ACCOUNT  BALANCE  Cash $13,185Dr. Interest Payable − Accounts Receivable 9,500Dr. Unearned Income $600Cr.\begin{array}{|l|l|l|l|}\hline {\text { ACCOUNT }} & \text { BALANCE } & \text { ACCOUNT } & \text { BALANCE } \\\hline \text { Cash } & \$ 13,185 \mathrm{Dr} . & \text { Interest Payable } & - \\\hline \text { Accounts Receivable } & 9,500 \mathrm{Dr} . & \text { Unearned Income } & \$ 600 \mathrm{Cr} . \\\hline\end{array} On July 31, 2019, after one month of operation, the general ledger of Dakota Consulting contained the following accounts and balances. The firm adjusts losses from uncollectible accounts only at the end of the fiscal year. Monthly adjustments are listed below. Prepare the Trial Balance, Adjustments, and Adjusted Trial Balance sections of a worksheet. \begin{array}{|l|l|l|l|} \hline {\text { ACCOUNT }} & \text { BALANCE } & \text { ACCOUNT } & \text { BALANCE } \\ \hline \text { Cash } & \$ 13,185 \mathrm{Dr} . & \text { Interest Payable } & - \\ \hline \text { Accounts Receivable } & 9,500 \mathrm{Dr} . & \text { Unearned Income } & \$ 600 \mathrm{Cr} . \\ \hline \end{array} Adjustments: (a)On July 31, an inventory of the supplies showed that items costing $250 were on hand. (b)On July 1, the firm paid $3,000 in advance for 6 months rent. (c)On July 1, the firm paid $240 interest in advance on a 3-month note that it issued to the bank. (d)On July 2, the firm purchased office equipment for $14,500. The office equipment is expected to have a useful life of 5 years and a salvage value of $1,000. (e)On July 1, the firm issued a 3-month, 9 percent note for $4,000. (f)During July, the firm received $600 from customers in advance of providing services. An Analyze of the firm's records shows that the full amount applies to services provided in July. DAKOTA CONSULTING Worksheet Month Ended July 31, 2019 DAKOTA CONSULTING Worksheet, continued (through Adjusted Trial Balance Column)Month Ended July 31, 2019 \begin{array} { | l | l | l | } \hline 20 & \quad\quad\quad& \quad\quad\quad\\ \hline 21 & & \\ \hline 22 & & \\ \hline \end{array} Adjustments: (a)On July 31, an inventory of the supplies showed that items costing $250 were on hand. (b)On July 1, the firm paid $3,000 in advance for 6 months rent. (c)On July 1, the firm paid $240 interest in advance on a 3-month note that it issued to the bank. (d)On July 2, the firm purchased office equipment for $14,500. The office equipment is expected to have a useful life of 5 years and a salvage value of $1,000. (e)On July 1, the firm issued a 3-month, 9 percent note for $4,000. (f)During July, the firm received $600 from customers in advance of providing services. An Analyze of the firm's records shows that the full amount applies to services provided in July. DAKOTA CONSULTING Worksheet Month Ended July 31, 2019 On July 31, 2019, after one month of operation, the general ledger of Dakota Consulting contained the following accounts and balances. The firm adjusts losses from uncollectible accounts only at the end of the fiscal year. Monthly adjustments are listed below. Prepare the Trial Balance, Adjustments, and Adjusted Trial Balance sections of a worksheet. \begin{array}{|l|l|l|l|} \hline {\text { ACCOUNT }} & \text { BALANCE } & \text { ACCOUNT } & \text { BALANCE } \\ \hline \text { Cash } & \$ 13,185 \mathrm{Dr} . & \text { Interest Payable } & - \\ \hline \text { Accounts Receivable } & 9,500 \mathrm{Dr} . & \text { Unearned Income } & \$ 600 \mathrm{Cr} . \\ \hline \end{array} Adjustments: (a)On July 31, an inventory of the supplies showed that items costing $250 were on hand. (b)On July 1, the firm paid $3,000 in advance for 6 months rent. (c)On July 1, the firm paid $240 interest in advance on a 3-month note that it issued to the bank. (d)On July 2, the firm purchased office equipment for $14,500. The office equipment is expected to have a useful life of 5 years and a salvage value of $1,000. (e)On July 1, the firm issued a 3-month, 9 percent note for $4,000. (f)During July, the firm received $600 from customers in advance of providing services. An Analyze of the firm's records shows that the full amount applies to services provided in July. DAKOTA CONSULTING Worksheet Month Ended July 31, 2019 DAKOTA CONSULTING Worksheet, continued (through Adjusted Trial Balance Column)Month Ended July 31, 2019 \begin{array} { | l | l | l | } \hline 20 & \quad\quad\quad& \quad\quad\quad\\ \hline 21 & & \\ \hline 22 & & \\ \hline \end{array} On July 31, 2019, after one month of operation, the general ledger of Dakota Consulting contained the following accounts and balances. The firm adjusts losses from uncollectible accounts only at the end of the fiscal year. Monthly adjustments are listed below. Prepare the Trial Balance, Adjustments, and Adjusted Trial Balance sections of a worksheet. \begin{array}{|l|l|l|l|} \hline {\text { ACCOUNT }} & \text { BALANCE } & \text { ACCOUNT } & \text { BALANCE } \\ \hline \text { Cash } & \$ 13,185 \mathrm{Dr} . & \text { Interest Payable } & - \\ \hline \text { Accounts Receivable } & 9,500 \mathrm{Dr} . & \text { Unearned Income } & \$ 600 \mathrm{Cr} . \\ \hline \end{array} Adjustments: (a)On July 31, an inventory of the supplies showed that items costing $250 were on hand. (b)On July 1, the firm paid $3,000 in advance for 6 months rent. (c)On July 1, the firm paid $240 interest in advance on a 3-month note that it issued to the bank. (d)On July 2, the firm purchased office equipment for $14,500. The office equipment is expected to have a useful life of 5 years and a salvage value of $1,000. (e)On July 1, the firm issued a 3-month, 9 percent note for $4,000. (f)During July, the firm received $600 from customers in advance of providing services. An Analyze of the firm's records shows that the full amount applies to services provided in July. DAKOTA CONSULTING Worksheet Month Ended July 31, 2019 DAKOTA CONSULTING Worksheet, continued (through Adjusted Trial Balance Column)Month Ended July 31, 2019 \begin{array} { | l | l | l | } \hline 20 & \quad\quad\quad& \quad\quad\quad\\ \hline 21 & & \\ \hline 22 & & \\ \hline \end{array} On July 31, 2019, after one month of operation, the general ledger of Dakota Consulting contained the following accounts and balances. The firm adjusts losses from uncollectible accounts only at the end of the fiscal year. Monthly adjustments are listed below. Prepare the Trial Balance, Adjustments, and Adjusted Trial Balance sections of a worksheet. \begin{array}{|l|l|l|l|} \hline {\text { ACCOUNT }} & \text { BALANCE } & \text { ACCOUNT } & \text { BALANCE } \\ \hline \text { Cash } & \$ 13,185 \mathrm{Dr} . & \text { Interest Payable } & - \\ \hline \text { Accounts Receivable } & 9,500 \mathrm{Dr} . & \text { Unearned Income } & \$ 600 \mathrm{Cr} . \\ \hline \end{array} Adjustments: (a)On July 31, an inventory of the supplies showed that items costing $250 were on hand. (b)On July 1, the firm paid $3,000 in advance for 6 months rent. (c)On July 1, the firm paid $240 interest in advance on a 3-month note that it issued to the bank. (d)On July 2, the firm purchased office equipment for $14,500. The office equipment is expected to have a useful life of 5 years and a salvage value of $1,000. (e)On July 1, the firm issued a 3-month, 9 percent note for $4,000. (f)During July, the firm received $600 from customers in advance of providing services. An Analyze of the firm's records shows that the full amount applies to services provided in July. DAKOTA CONSULTING Worksheet Month Ended July 31, 2019 DAKOTA CONSULTING Worksheet, continued (through Adjusted Trial Balance Column)Month Ended July 31, 2019 \begin{array} { | l | l | l | } \hline 20 & \quad\quad\quad& \quad\quad\quad\\ \hline 21 & & \\ \hline 22 & & \\ \hline \end{array} DAKOTA CONSULTING Worksheet, continued (through Adjusted Trial Balance Column)Month Ended July 31, 2019 On July 31, 2019, after one month of operation, the general ledger of Dakota Consulting contained the following accounts and balances. The firm adjusts losses from uncollectible accounts only at the end of the fiscal year. Monthly adjustments are listed below. Prepare the Trial Balance, Adjustments, and Adjusted Trial Balance sections of a worksheet. \begin{array}{|l|l|l|l|} \hline {\text { ACCOUNT }} & \text { BALANCE } & \text { ACCOUNT } & \text { BALANCE } \\ \hline \text { Cash } & \$ 13,185 \mathrm{Dr} . & \text { Interest Payable } & - \\ \hline \text { Accounts Receivable } & 9,500 \mathrm{Dr} . & \text { Unearned Income } & \$ 600 \mathrm{Cr} . \\ \hline \end{array} Adjustments: (a)On July 31, an inventory of the supplies showed that items costing $250 were on hand. (b)On July 1, the firm paid $3,000 in advance for 6 months rent. (c)On July 1, the firm paid $240 interest in advance on a 3-month note that it issued to the bank. (d)On July 2, the firm purchased office equipment for $14,500. The office equipment is expected to have a useful life of 5 years and a salvage value of $1,000. (e)On July 1, the firm issued a 3-month, 9 percent note for $4,000. (f)During July, the firm received $600 from customers in advance of providing services. An Analyze of the firm's records shows that the full amount applies to services provided in July. DAKOTA CONSULTING Worksheet Month Ended July 31, 2019 DAKOTA CONSULTING Worksheet, continued (through Adjusted Trial Balance Column)Month Ended July 31, 2019 \begin{array} { | l | l | l | } \hline 20 & \quad\quad\quad& \quad\quad\quad\\ \hline 21 & & \\ \hline 22 & & \\ \hline \end{array} 202122\begin{array} { | l | l | l | } \hline 20 & \quad\quad\quad& \quad\quad\quad\\\hline 21 & & \\\hline 22 & & \\\hline\end{array}

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DAKOTA CONSULTING
Worksheet
M...

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Match the description with the accounting terms.

Premises
Income received before it is earned
Income that has been earned but not yet received and recorded
Expenses that are paid for and recorded before they are used, such as rent or insurance
Expense items that relate to the current period but have not yet been paid and do not yet appear in the accounting records
Long-term assets that are used in the operation of a business and that are subject to depreciation (except for land, which is not depreciated)
Another term for prepaid expenses
A system of accounting by which all revenues and expenses are matched and reported on financial statements for the applicable period, regardless of when the cash related to the transaction is received or paid
The difference between the debit and credit columns of the Income Statement and the debit and credit columns of the Balance Sheet on the worksheet.
A form used to list the volume and type of goods a firm has in stock
Another term for unearned income
The amounts entered in the Adjusted Trial Balance section of the worksheet
Responses
Prepaid expenses
Accrued income
Net income or Net loss
Unearned income
Inventory sheet
Property, plant, and equipment
Accrual basis
Updated account balances
Deferred expenses
Deferred income
Accrued expenses

Correct Answer

Income received before it is earned
Income that has been earned but not yet received and recorded
Expenses that are paid for and recorded before they are used, such as rent or insurance
Expense items that relate to the current period but have not yet been paid and do not yet appear in the accounting records
Long-term assets that are used in the operation of a business and that are subject to depreciation (except for land, which is not depreciated)
Another term for prepaid expenses
A system of accounting by which all revenues and expenses are matched and reported on financial statements for the applicable period, regardless of when the cash related to the transaction is received or paid
The difference between the debit and credit columns of the Income Statement and the debit and credit columns of the Balance Sheet on the worksheet.
A form used to list the volume and type of goods a firm has in stock
Another term for unearned income
The amounts entered in the Adjusted Trial Balance section of the worksheet

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