Question

Grade: Chapter 3: Accrual Basis of Accounting 1. Fred Company paid $48,000 for a two-year insurance policy on October 1 and recorded the $48,000 as a debit to Prepaid Insurance and a credit to Cash. What adjusting entry should Fred make on December 31, the end of the accounting period (no previous adjustment has been made)? 2. As of the beginning of 2016, the Let's Move Company had equipment totaling $1,800,000 which was depreciated at $150,000 per year. If Let's Move makes the appropriate adjusting entry at year end, which of the following is one part of the journal entry that will be made? 3. Early in the accounting period. Appreciative Client paid $3,000 for services in advance of receiving them, Cash was debited and Uneared Service Fees was credited for $3,000. At the end of the accounting period, two-thirds of the services paid for had yet to be performed The proper adjusting entry is: 4. As of the beginning of 2016, the Let's Move Company had equipment totaling $1,800,000 which was depreciated at $150,000 per year. If Let's Move makes the appropriate adjusting entry at year end, which of the following is one part of the journal entry that will be made? 5. Susan Lane received $5,000 from a tenant on December 1 for five months' rent of an office. This rent was for December, January, February, March, and April. If Susan debited Cash and credited Uneamed Rental Income for $5,000 on December 1, what necessary adjustment would be made on December 317 6. Assume December 31 is a Monday, Weld-Rite Company's wages are paid every Friday, and the weekly payroll (for five days) amounts to $12,000. To record the correct amount of expense for December Weld- Rite makes the following entry on December 31:

Answer 1

Credit Adjusting entries as follows: Trn. Account Titles 1 Insurance Expense Prepaid Insurance [($48,000/2 years) x 3/12] (To record three month insurance expense) Debit $6,000 $6,000 2 $150.000 Depreciation expense Accumulated Depreciation- Equipment (To record depreciation expense) $150,000 3 $1.000 Unearned Service fees Service fees ($3000 x1/3) (To record revenue earned during the period) $1,000 $150,000 Depreciation expense Accumulated Depreciation- Equipment (To record depreciation expense) $150,000 | $1,000 Unearned rental income Rental Income ($5000 x 1/5) (To record rental income earned during the period) $1,000 $2,400 Wages expense Wages payable ($12000/5 days) x 1 day (To record wage expense) $2,400