College Accounting Chapters 1 30 15th Edition Price Test Bank 1

COLLEGE ACCOUNTING CHAPTERS 1 30
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Chapter 05 Adjustments and the Worksheet
MULTIPLE CHOICE QUESTIONS
1) Prepaid expenses, such as prepaid rent and prepaid insurance, represent assets for a business until
they are used.
A) True
B) False
2) The cost of a long-term asset, such as equipment, is transferred to expense as it is used during its
useful life.
A) True
B) False
3) If the adjustment for supplies used is not recorded, the firm's assets will be overstated.
A) True
B) False
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4) If the adjustment for expired rent is not recorded, the firm's expenses will be overstated.
A) True
B) False
5) The normal balance of a contra asset account is a debit.

A) True
B) False
6) Letters are used to label the corresponding debit and credit transactions of an adjustment on the
worksheet.
A) True
B) False
7) Land is a long-term asset that is not subject to depreciation.

A) True
B) False
8) The balances of the revenue accounts are recorded in the Trial Balance Credit column, the
Adjusted Trial Balance Credit column, and the Balance Sheet Credit column of the worksheet.
A) True
B) False
9) Preparation of a worksheet eliminates the necessity of preparing an income statement and a balance
sheet.
A) True
B) False
10) In the Adjusted Trial Balance section of the worksheet the total debits should equal the total
credits.
A) True
B) False
11) The balance of the owner's drawing account is extended to the Income Statement Debit column of
the worksheet.
A) True
B) False
12) The balance of a liability account is extended to the Balance Sheet Credit column of the worksheet.
A) True
B) False
13) The statement of owner's equity is prepared from the data in the Balance Sheet section of the
worksheet.
A) True
B) False
14) If adjustments are entered on a worksheet, it is not necessary to record them in the journal or the
ledger.
A) True
B) False
15) Which of the following need not be completed separately if a worksheet is prepared?
A) a trial balance B) a balance sheet
C) an income statement D) a statement of owner's equity
16) When a trial balance is in balance,

A) adjusting entries are not required.
B) the company has earned a net income.
C) the general ledger is free of errors.
D) the debit account balances equal the credit account balances.
17) A total of $2,800 in supplies was purchased during the year. At the end of the year $700 of the
supplies were left. The adjusting entry needed at the end of the year is:
A) debit Supplies Expense $700; credit Supplies $700
B) debit Supplies Expense $2,800; credit Supplies $2,800
C) debit Supplies Expense $2,100; credit Supplies $2,100
D) debit Supplies $2,100; credit Supplies Expense $2,100
18) A total of $3,700 in supplies was purchased during the year. By the end of the year, the company
had used $2,200 of the supplies. The adjusting entry needed at the end of the year is:
A) debit Supplies $2,200; credit Supplies Expense $2,200
D) debit Supplies Expense $2,200; credit Supplies $2,200
19) MacGyver Company bought equipment on January 3, 2019, for $52,000. At the time of purchase,
the equipment was estimated to have a useful life of five years and a salvage value of $4,000.
Using the straight-line method, the amount of one year's depreciation is:
A) $1,200. B) $4,000. C) $9,600. D) $10,400.
20) Adjusting Entries are:

A) updating entries for previously unrecorded expenses or revenues.
B) corrections of errors.
C) not required.
D) will always affect cash.
21) Equipment costing $27,000 with an estimated salvage value of $2,040 and an estimated life of 4
years was purchased on October 31, 2019. Using the straight-line depreciation method, what is the
amount of depreciation expense to be recorded at December 31, 2019?
A) $520 B) $1,560 C) $1,125 D) $1,040
22) Which of the following entries records the depreciation on equipment for the fiscal year-end
adjustment?
A) Debit Depreciation; credit Depreciation Expense
B) Debit Depreciation Expense; credit Equipment
C) Debit Depreciation Expense; credit Accumulated Depreciation
D) Debit Accumulated Depreciation; credit Depreciation Expense
23) On January 1, ABC Catering purchased an oven for $5,000. The oven is expected to last five years
and have no salvage value. Select the adjusting entry made on December 31, to record the
depreciation of the oven for one year.
A)
Depreciation Expense $ 500
Accumulated Depreciation--Equipment $ 500
B)
Accumulated Depreciation-Equipment $ 500
Equipment $ 500
C)
Depreciation Expense $ 1,000
Equipment $ 1,000
D)
Accumulated Depreciation-Equipment $ 1,000
24) On January 1, 2019, Johnson Consulting purchased a truck for $18,000. The truck is expected to
last 60 months and have no salvage value. Calculate the book value of the truck on December 31,
2020.
A) $3,600 B) $14,400 C) $7,200 D) $10,800
25) On September 1, 2019, Jay Walker Company purchased a one-year insurance policy for $1,320.
The correct adjusting entry on December 31, 2019, is:
A) debit Prepaid Insurance $110; credit Insurance Expense $110
B) debit Insurance Expense $330; credit Prepaid Insurance $330
C) debit Prepaid Insurance $1,320; credit Insurance Expense $1,320
D) debit Insurance Expense $440; credit Prepaid Insurance $440
26) On November 1, 2019, Peaches Consulting Service paid $4,800 for 12 months of advance rent on
its office space. The correct adjusting entry on December 31, 2019, to show the amount of rent that
had expired would include:
A) debit Rent Expense $4,800; credit Prepaid Rent $4,800
B) debit Rent Expense $800; credit Prepaid Rent $800
C) debit Rent Expense $400; credit Prepaid Rent $400
D) debit Prepaid Rent $4,000; credit Rent Expense $4,000
27) Equipment cost $36,000 and is expected to be useful for 5 years and have no salvage value. Under
the straight-line method, monthly depreciation will be:
A) $12. B) $600. C) $60. D) $720.
28) J. B. Consulting purchased a machine for $6,000 on August 1, 2019. The company expects the
useful life of the machine to be 5 years and no salvage value is expected. If the company uses the
straight-line method to depreciate the machine, what will be the depreciation adjustment for the
year ending December 31, 2019?
A) Debit Depreciation Expense $500 and Credit Equipment $500.
B) Debit Depreciation Expense $400 and Credit Accumulated Depreciation $400.
C) Debit Depreciation Expense $500 and Credit Accumulated Depreciation $500.
D) Debit Accumulated Depreciation $100 and Credit Depreciation Expense $100.
29) On a worksheet, the adjusting entry to account for depreciation of equipment consists of:
A) a debit to Accumulated Depreciation and a credit to Equipment.
B) a debit to Depreciation Expense and a credit to Accumulated Depreciation.
C) a debit to Depreciation Expense and a credit to Equipment.
D) a debit to Accumulated Depreciation and a credit to Depreciation Expense.
30) If the prepaid expenses are not adjusted, assets on the balance sheet:
A) will be understated. B) will be overstated.
C) may be either overstated or understated. D) will not be affected.
31) If long-term assets are not adjusted, expenses on the income statement:
A) will be overstated. B) will be understated.
C) will not be affected. D) may be either overstated or understated.
32) On October 25, 2019, the company paid $24,000 rent in advance for the six-month period
(November 2019 through April 2020). On December 31, 2019, the adjustment for expired rent
would include:
A) a $4,000 credit to Prepaid Rent. B) a $8,000 credit to Rent Expense.
C) a $8,000 debit to Rent Expense. D) a $24,000 credit to Cash.
33) On March 1, 2019, the company paid $6,000 rent in advance for a 12-month period. On December
31, 2019, the company's adjustment for expired rent would include:
A) a $6,000 debit to Prepaid Rent; a $6,000 credit to Rent Expense.
B) a $1,000 debit to Rent Expense; a $1,000 credit to Prepaid Rent.
C) a $5,000 debit to Rent Expense; a $5,000 credit to Prepaid Rent.
D) a $5,000 debit to Prepaid Rent; a $5,000 credit to Rent Expense.
34) On July 1, Sidney Consulting Services paid $18,000 for 12 months of advance rent on its office
building. Select the adjusting entry made on December 31, to record the amount of rent that had
expired during the year.
A)
Rent Expense $ 10,500
Prepaid Rent $ 10,500
B)
C)
D)
35) The balance in the Prepaid Rent account before adjustment at the end of the year is $12,000, which
represents 12 months rent paid on November 1. The adjusting entry required on December 31 to
show the amount of rent that had expired is:
A)
B)
C)
Cash $ 12,000
D)
36) The adjusting entry to account for the use of supplies consists of:
A) a debit to Supplies and a credit to Accumulated Depreciation.
B) a debit to Accumulated Depreciation and a credit to Supplies.
C) a debit to Supplies and a credit to Supplies Expense.
D) a debit to Supplies Expense and a credit to Supplies.
37) On December 31, Treats Catering Inc.'s trial balance shows a $1,000 balance in the Supplies
account. However, a physical count of the supplies determined that only $350 of supplies actually
remain in the supply cabinet. Select the adjusting entry made on December 31, to record the
amount of supplies that had been used during the year.
A)
Supplies Expense. $ 350
Supplies $ 350
B)
Supplies $ 350
Supplies Expense $ 350
C)
Supplies $ 650
D)
Supplies $ 650
38) During its first year of business, XYZ Inc. purchased $1,600 of supplies. By the end of the year,
only $500 of supplies remain in the supply cabinet. Determine the amount to be reported in the
Supplies account in the Adjusted Trial Balance section of the worksheet prepared on December 31.
A) $500 B) $1,600 C) $1,100 D) $2,100
39) Adjusting entries can be journalized:

A) only once per accounting quarter.
B) only once a month.
C) as often as necessary.
D) only once a year at the end of the accounting year.
40) The adjusting entry to account for the expiration of prepaid insurance consists of:
A) a debit to Accumulated Depreciation and a credit to Prepaid Insurance.
B) a debit to Insurance Expense and a credit to Prepaid Insurance.
C) a debit to Insurance Expense and a credit to Accumulated Depreciation.
D) a debit to Prepaid Insurance and a credit to Accumulated Depreciation.
41) The adjusting entry to account for the expiration of prepaid advertising consists of:
A) a debit to Prepaid Advertising and a credit to Accumulated Depreciation.
B) a debit to Prepaid Advertising and a credit to Advertising Expense.
C) a debit to Advertising Expense and a credit to Accumulated Depreciation.
D) a debit to Advertising Expense and a credit to Prepaid Advertising.
42) Which of the following statements is not correct?

A) The book value of a long-term asset is reduced each year as depreciation is recorded.
B) Buildings and trucks are examples of long-term assets.
C) Salvage value is computed by subtracting the accumulated depreciation from the cost of a
long-term asset.
D) Generally accepted accounting principles require that the original cost of a long-term asset
continue to appear in the asset account until the disposition of the asset.
43) On a worksheet, the adjusted balance of the Accumulated Depreciation account is extended to:
A) the Balance Sheet Credit column. B) the Income Statement Debit column.
C) the Income Statement Credit column. D) the Balance Sheet Debit column.
44) On a worksheet, the adjusted balance of the Depreciation Expense account is extended to:
A) the Income Statement Debit column. B) the Balance Sheet Debit column.
C) the Income Statement Credit column. D) the Balance Sheet Credit column.
45) On a worksheet, the adjusted balance of the Supplies account is extended to:
A) the Income Statement Debit column. B) the Balance Sheet Credit column.
46) On a worksheet, the adjusted balance of the Supplies Expense account is extended to:
A) the Balance Sheet Debit column. B) the Income Statement Debit column.
C) the Balance Sheet Credit column. D) the Income Statement Credit column.
47) Which of the following statements is correct?

A) Accumulated Depreciation--Equipment is presented in the Liabilities section of a balance
sheet.
B) The cost of supplies used is reported on the statement of owner's equity.
C) The cost of supplies used represents an operating expense of the business.
D) At the time of their acquisition, prepaid expenses are recorded in expense accounts.
48) On a worksheet, the adjusted balance of the Prepaid Rent account is extended to the:
A) Income Statement Debit column. B) Balance Sheet Credit column.
C) Balance Sheet Debit column. D) Income Statement Credit column.
49) On a worksheet, the adjusted balance of the revenue account Fees Income would be extended to:
50) On the worksheet, the Balance Sheet columns should balance:

A) after the net income amount is added to the Balance Sheet Credit column.
B) before the net income amount is added to the Balance Sheet Credit column.
C) before the net income amount is added to the Balance Sheet Debit column.
D) after the net income amount is added to the Balance Sheet Debit column.
51) On a worksheet, the adjusted balance of a contra asset account would be extended to:
52) On a worksheet, a net loss is:

A) recorded in the Income Statement Debit column.
B) not recorded.
C) recorded in the Balance Sheet Credit column.
D) recorded in the Balance Sheet Debit column.
53) If a worksheet is prepared at the end of the accounting year,

A) the financial statements are prepared using the worksheet data.
B) preparation of the financial statements is not required.
C) the adjusting entries do not need to be journalized.
D) only a balance sheet is required.

A) If an account has a debit balance in the Trial Balance section of the worksheet and there is a
credit entry in the Adjustments section, the credit amount is added when computing the
balance to be shown in the Adjusted Trial Balance section of the worksheet.
B) Net loss is recorded on the worksheet in the Income Statement Credit column and the Balance
Sheet Debit column.
C) Net income is recorded on the worksheet in the Income Statement Debit column and the
Balance Sheet Credit column.
D) The difference between the total of the Income Statement Debit column and the total of the
Income Statement Credit column of the worksheet represents either net income or net loss.
55) On a balance sheet, Accumulated Depreciation—Equipment is reported:

A) as a contra-asset on the Balance Sheet. B) as a liability on the Income Statement.
C) as an expense on the Income Statement. D) as owner's equity on the Balance Sheet.
10
56) The book value of long-term assets is reported on:
A) the worksheet. B) the statement of owner's equity.
C) the income statement. D) the balance sheet.
57) The balance in the account Accumulated Depreciation, Equipment will:

A) be reported on the Statement of Owner's Equity.
B) will be reported on the Balance Sheet.
C) not appear on any financial statement.
D) be reported on the Income Statement.
58) A consecutive, twelve-month accounting period is called a(n):

A) adjusted year. B) fiscal year.
C) accounting year. D) accrual year.
59) Accumulated Depreciation, Equipment, is shown as:

A) an addition to expenses on the Income Statement.
B) a deduction of Capital on the Statement of Owner's Equity.
C) an addition to assets on the Balance Sheet.
D) a deduction from assets on the Balance Sheet.
60) The adjustments made on the worksheet:

A) need not be entered in the journal or the ledger.
B) are posted to the ledger but are not recorded in the journal.
C) are recorded in the journal but are not posted to the ledger.
D) are recorded in the journal and then posted to the general ledger accounts.
61) The unadjusted net income on the income statement was $46,850. After journalizing and posting
the adjusting entry for the $2,300 of supplies used during the year, the adjusted net income is:
A) $46,850. B) $44,550. C) $49,150. D) $45,700.
the adjusting entries for the $1,620 of supplies used and $3,700 of depreciation on the company's
equipment for the year, the adjusted net income is:
A) $25,840. B) $18,440. C) $21,680. D) $29,080.
the adjusting entry for the $600 of prepaid advertising that expired and $1,600 in supplies used
during the year, the adjusted net income is:
A) $41,800. B) $39,600. C) $40,200. D) $41,200.
11
the adjusting entries for expired insurance during the year of $3,400 and for supplies used during
the year of $1,480, the adjusted net income is:
A) $69,796. B) $61,516. C) $64,916. D) $60,036.
65) The total assets on the balance sheet was $128,800 before journalizing and posting the adjusting
entries for $800 of expired insurance, $2,400 of expired rent and $900 of depreciation. What are
the total assets after journalizing and posting the adjusting?
A) $128,800. B) $124,700. C) $126,500. D) $132,900.
SHORT ANSWER QUESTIONS
66) The process of allocating the cost of a long-term asset as an expense of operations during the
asset's expected useful life is known as ________.
67) The difference between the debit balance of the Equipment account and the credit balance of the
Accumulated Depreciation–Equipment account is called the ________ of an asset.
68) The Supplies account had a balance of $1,200 when a physical count indicated that supplies on
hand totaled $250. This means that supplies in the amount of ________ were used during the
accounting period.
69) The process of updating accounts at the end of an accounting period for previously unrecorded
items that belong to the period is referred to as making ________.
70) The account credited in the adjusting entry made to record the expiration of a portion of prepaid
rent is the ________ account.
71) Accumulated depreciation is classified as a(n) ________ account.
72) When the ________ method of depreciation is used, an equal amount of depreciation is charged to
each accounting period during the asset's useful life.
73) The account accumulated depreciation has a normal balance.
74) A(n) ________ is prepared at the end of each accounting period to organize and summarize the
data needed for the preparation of the financial statements.
75) On a worksheet, the adjusted balance of Supplies is extended from the Adjusted Trial Balance
Debit column to the ________ Debit column.
12
76) On a worksheet, the adjusted balance of Depreciation Expense is extended from the Adjusted Trial
Balance Debit column to the ________ Debit column.
77) For each of the accounts listed below, enter the words, Increase or Decrease, in the Debit and Credit
columns to indicate the effects of each on the account balance.
Account Debit Credit

A. Accumulated Deprecation
B. Depreciation Expense
C. Equipment
D. Prepaid Rent
E. Rent Expense
F. Supplies
G. Supplies Expense

B. Advertising Expense
C. Depreciation Expense
D. Insurance Expense
E. Land
F. Prepaid Advertising
G. Prepaid Insurance
79) Read each of the following transactions for Patel's Repair Services. Determine the accounts and
amounts to be debited and credited in the necessary end-of-May adjustments.
A. On May 1, 2019, Patel's Repair Services, a new firm, paid $6,600 rent in advance for a six-month
period. The $6,600 was debited to the Prepaid Rent account.
B. On May 1, 2019, the firm bought supplies for $2,000. The $2,000 was debited to the Supplies
account. An inventory of supplies at the end of May showed that supplies costing $800 were on
hand.
C. On May 1, 2019, the firm bought equipment costing $12,000. The equipment has an expected
useful life of 10 years and no salvage value. The firm will use the straight-line method of
depreciation.
13
80) Read each of the following transactions for Pickerton Printer Repair Services. Determine the
accounts and amounts to be debited and credited in the necessary end-of-April adjustments.
A. On April 1, 2019, Pickerton Printer Repair Services, a new firm, bought supplies for $2,500. The
$2,500 was debited to the Supplies account. An inventory of supplies at the end of April showed that
supplies costing $1,500 were on hand.
B. On April 1, 2019, the firm bought equipment costing $25,000. The equipment has an expected
useful life of 10 years and a salvage value of $1,000. The firm will use the straight-line method of
depreciation.
C. On April 1, 2019, the firm paid $7,200 rent in advance for a six-month period. The $7,200 was
debited to the Prepaid Rent account.
81) Read each of the following transactions for Gallagher Enterprises. Determine the accounts and
amounts to be debited and credited in the necessary end-of-January adjustments.
A. On January 1, 2019, Gallagher Enterprises, a new firm, paid $4,800 rent in advance for a
three-month period. The $4,800 was debited to the Prepaid Rent account.
B. On January 1, 2019, the firm bought supplies for $3,000. The $3,000 was debited to the Supplies
account. An inventory of supplies at the end of January showed that supplies costing $1,300 were on
hand.
C. On January 1, 2019, the firm bought equipment costing $15,000. The equipment has an expected
depreciation.
82) Read each of the following transactions for Enterprises Security Systems. Determine the accounts
and amounts to be debited and credited in the necessary end-of-July adjustments.
A. On July 1, 2019, Enterprises Security Systems, a new firm, bought supplies for $2,300. The
$2,300 was debited to the Supplies account. An inventory of supplies at the end of July showed that
supplies costing $900 were on hand.
B. On July 1, 2019, the firm bought equipment costing $24,000. The equipment has an expected
depreciation.
C. On July 1, 2019, the firm paid $4,500 rent in advance for a nine-month period. The $4,500 was
14
83) Read the description of the following adjustments that are required at the end of the accounting
period for Riley Furniture Restoration. Determine the account and amount to be debited and the
account and amount to be credited.
A. Purchased supplies for $1,000 on June 1, 2019. Inventory of supplies was $300 on June 30,
2019. Record the adjustment for the amount of the supplies used during the month of June 2019.
B. Signed a 4-month contract for $1,200 of prepaid advertising on June 1, 2019. Record the
adjustment for the amount of the advertising contract that expired during the month of June 2019.
C. Prepaid rent for one year on June 1, 2019, in the amount of $12,600.
D. Depreciation is computed using the straight-line method. Equipment purchased on June 1, 2019,
for $16,800 has an estimated useful life of 5 years with no salvage value. Record the adjustment on
June 30, 2019.
84) Read the description of following adjustments that are required at the end of the accounting period
for Hubbard Repair Services. Determine the account and amount to be debited and the account and
amount to be credited.
A. Purchased supplies for $2,000 on November 1, 2019. Inventory of supplies was $600 on
November 30, 2019. Record the adjustment for the amount of the supplies that were used during the
month of November 2019.
B. Signed a 4-month contract for $2,400 of prepaid advertising on November 1, 2019. Record the
adjustment for the amount of the advertising contract that expired during the month of November
2019.
C. Prepaid rent for the year on November 1, 2019. Rent expired during the month of November
2019, $1,500. Record the adjustment on November 30, 2019.
D. Depreciation is computed using the straight-line method. Equipment purchased on November 1,
2019, for $6,000 has an estimated useful life of 5 years with no salvage value. Record the adjustment
on November 30, 2019.
15
A. Prepaid rent for the year on April 1, 2019. Rent expired during the month of April 2019, $3,500.
Record the adjustment on April 30, 2019.
B. Purchased supplies for $2,000 on April 1, 2019. Inventory of supplies was $1,600 on April 30,
2019. Record the adjustment for the amount of the supplies that were used during the month of April
2019.
C. Depreciation is computed using the straight-line method. Equipment purchased on April 1, 2019,
April 30, 2019.
D. Signed a 6-month contract for $2,400 of prepaid advertising on April 1, 2019. Record the
adjustment for the amount of the contract that expired during the month of April 2019.
for Drake Consulting Services. Determine the account and amount to be debited and the account and
A. Prepaid rent for one year on January 1, 2019, in the amount of $26,400. Record the adjustment
on January 31, 2019.
B. Purchased supplies for $1,600 on January 1, 2019. The inventory of supplies was $400 on
January 31, 2019. Record the adjustment for the amount of the supplies that were used during the
month of January 2019.
C. Depreciation is computed using the straight-line method. Equipment purchased on January 1,
2019, for $36,000 has an estimated useful life of 6 years with no salvage value. Record the
adjustment on January 31, 2019.
D. Signed a 12-month contract for $3,000 of prepaid advertising on January 1, 2019. Record the
adjustment for the amount of the advertising contract that expired during the month of January 2019.
for AAA Appliance Repair Services. Record the necessary adjusting entries required at the end of
January on page 2 of a general journal. Omit the descriptions.
A. Prepaid rent for the year on January 1, 2019. Rent expired during the month of January 2019,
$2,000.
B. Purchased supplies for $7,600 on January 1, 2019. Inventory of supplies was $1,600 on January
31, 2019.
2019, for $15,000 has an estimated useful life of 5 years with no salvage value.
D. Signed a 3-month contract for $600 of prepaid advertising on January 1, 2019.
16
for Anise's Repair Services. Record the necessary adjusting entries required at the end of January on
page 2 of a general journal. Omit the descriptions.
$1,600.
31, 2019.
for Paulo Consulting Services. Record the necessary adjusting entries required at the end of January
on page 2 of a general journal. Omit the descriptions.
A. Equipment was purchased on January 1, 2019, for $60,000 and has an estimated useful life of 7
years with a salvage value of $3,720. Depreciation is computed using the straight-line method.
B. Signed a 5-month contract for $4,500 of prepaid advertising on January 1, 2019.
C. Prepaid rent for the year on January 1, 2019, in the amount of $22,200.
D. Purchased supplies for $3,200 on January 1, 2019. Inventory of supplies was $2,800 on January
31, 2019.
for River Front Repair. Record the necessary adjusting entries required at the end of January on page
2 of a general journal. Omit the descriptions.
A. Prepaid rent for the year on January 1, 2019. Rent expired during the month of January, $7,200.
B. Equipment purchased on January 1, 2019, for $8,100 has an estimated useful life of 5 years with
no salvage value. Depreciation is computed using the straight-line method.
C. Purchased supplies for $650 on January 1, 2019. Inventory of supplies was $100 on January 31,
2019.
D. Signed a 12-month contract for $4,800 of prepaid advertising on January 1, 2019.
91) The balances of the ledger accounts for Oleman Services on January 31, 2019, and the information
needed for adjustments are shown below. Prepare the Trial Balance section, record the adjustments,
and complete the worksheet.
Account Name Balance

Cash $6,500
Accounts Receivable 3,500
Supplies 1,200
Prepaid Insurance 3,000
17
Equipment 7,500
Accumulated Depreciation -Equipment --
Accounts Payable 3,400
Jeff Oleman, Capital 17,500
Jeff Oleman, Drawing 1,500
Fees Income 9,500
Advertising Expense 600
Rent Expense 1,200
Salaries Expense 5,000
Supplies Expense --
Insurance Expense --
Utilities Expense 400
Depreciation Expense - Equipment --
Adjustment information:
(a) The supplies were purchased on January 1, 2019. An inventory of supplies showed $600 on hand
(b) The amount of Prepaid Insurance represents a payment made January 1, 2019, for a six-month
insurance policy.
(c) The equipment, purchased January 1, 2019, has an estimated useful life of 5 years with no
salvage value. The firm uses the straight-line method of depreciation.
OLEMAN SERVICES
Worksheet
Month Ended January 31, 2019
TRIAL BALANCE ADJUSTMENTS

ACCOUNT NAME DEBIT CREDIT DEBIT CREDIT
1
2
3
4
5
6
7
8
9
10
11
12
13 18
13
14
15
16
17
18
19
20
OLEMAN SERVICES
Worksheet (Continued)
ADJ. TRIAL BAL. INCOME STATEMENT BALANCE SHEET

DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT
1
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92) The balances of the ledger accounts for Buffet Services on September 30, 2019, and the information

Cash $13,000
Supplies 2,400
Equipment 15,000
Accumulated Depreciation - Equipment --
Jane Buffet, Capital 35,000
Jane Buffet, Drawing 3,000
Fees Income 19,000
Advertising Expense 1,200
Rent Expense 2,400
Supplies Expense --
(a) The supplies were purchased on September 1, 2019. An inventory of supplies showed $1,200 on
hand on September 30, 2019.
(b) The amount of Prepaid Insurance represents a payment made September 1, 2019, for a six-month
insurance policy.
(c) The equipment, purchased September 1, 2019, has an estimated useful life of 5 years with no
BUFFET SERVICES
Worksheet
Month Ended September 30, 2019

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BUFFET SERVICES

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93) The balances of the ledger accounts for Lance's Landscaping Design on March 31, 2019, and the
information needed for adjustments are shown below. Prepare the Trial Balance section, record the
adjustments, and complete the worksheet.

Cash $3,250
Supplies 600
Equipment 3,000
Accounts Payable 950
Lance, Capital 8,750
Lance, Drawing 750
Fees Income 4,750
Rent Expense 600
Supplies Expense --
(a) The supplies were purchased on March 1, 2019 An inventory of supplies showed $300 on hand
on March 31, 2019.
(b) The amount of Prepaid Insurance represents a payment made March 1, 2019, for a six-month
insurance policy.
(c) The equipment, purchased March 1, 2019, has an estimated useful life of 5 years with no salvage
value. The firm uses the straight-line method of depreciation.
LANCE'S LANDSCAPING DESIGN

Worksheet
Month Ended March 31, 2019
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94) The partial worksheet for the Lorado Insurance Agency for the month ended October 31, 2019, is
shown below. Using this data, prepare an income statement, a statement of owner's equity, and a
balance sheet. The owner made no additional investments during the month.
INCOME STATEMENT BALANCE SHEET

Cash 9,000
Supplies 5,500
Equipment 30,000
Accum. Depr.--Equip. 8,000
Ashleigh Lorado, Capital 32,000
Ashleigh Lorado, Drawing 2,000
Fees Income 23,300
Rent Expense 1,000
Supplies Expense 600
Depr. Exp.--Equip. 1,000
Totals 14,800 23,300 57,500 49,000
Net Income 8,500 8,500
23,300 23,300 57,500 57,500
24
95) The partial worksheet for the Marion Consulting Services for the month ended January 31, 2019, is

Cash 18,000
Supplies 11,000
Equipment 60,000
Mary Marion, Capital 64,000
Mary Marion, Drawing 4,000
Fees Income 46,600
Rent Expense 2,000
Supplies Expense 1,200
Totals 29,600 46,600 115,000 98,000
Net Income 17,000 17,000 46,600 46,600
115,000 115,000
25
96) Match the accounting terms with the description by entering the proper letter in the space provided.
A. Account form balance sheet
B. Adjusting entries or adjustments
C. Book value
D. Contra account
E. Contra asset account
F. Depreciation
G. Prepaid expenses
H. Report form balance sheet
I. Salvage value
J. Straight-line depreciation
K. Worksheet
1. Allocation of an asset's cost in equal amounts to each accounting period of the asset's
useful life
2. Journal entries made to update accounts for items that were used or expired during the
accounting period
________ 3. An estimate of the amount that could be received by selling or disposing of an asset at
the end of its useful life
________ 4. A balance sheet that lists assets on the left and liabilities and owner's equity on the right
5. An account with a normal balance that is opposite that of a related account
________ 6. A form used to gather all data needed at the end of an accounting period to prepare
financial statements
________ 7. That portion of an asset's original cost that has not yet been depreciated
________ 8. Expense items acquired, recorded, and paid for in advance of their use
________ 9. An asset account with a credit balance, which is contrary to the normal balance of an
asset account
10. A balance sheet that lists the asset accounts first, followed by liabilities and owner's
equity
________ 11. Allocation of the cost of a long-term asset to operations during its
expected useful life
Chapter 05 Adjustments and the Worksheet
MULTIPLE CHOICE QUESTIONS
1) Prepaid expenses, such as prepaid rent and prepaid insurance, represent assets for a business until
they are used.
A) True
B) False
Answer: A
Explanation:
Diff: 1
Topic: The Worksheet
Learning Objective: 05-02 Prepare adjustments for unrecorded business transactions.
Bloom's: Remember
AACSB: Analytical Thinking
AICPA: BB Industry; FN Measurement; FN Reporting
2) The cost of a long-term asset, such as equipment, is transferred to expense as it is used during its
useful life.
A) True
B) False
Answer: A
Explanation:
Diff: 1
Bloom's: Remember
3) If the adjustment for supplies used is not recorded, the firm's assets will be overstated.
A) True
B) False
Answer: A
Explanation:
Diff: 2
Bloom's: Remember
4) If the adjustment for expired rent is not recorded, the firm's expenses will be overstated.
A) True
B) False
Answer: B
Explanation:
Diff: 2
Bloom's: Remember
5) The normal balance of a contra asset account is a debit.

A) True
B) False
Answer: B
Explanation:
Diff: 2
Bloom's: Remember
6) Letters are used to label the corresponding debit and credit transactions of an adjustment on the
worksheet.
A) True
B) False
Answer: A
Explanation:
Diff: 1
Bloom's: Remember
7) Land is a long-term asset that is not subject to depreciation.
A) True
B) False
Answer: A
Explanation:
Diff: 1
Bloom's: Remember
8) The balances of the revenue accounts are recorded in the Trial Balance Credit column, the
Adjusted Trial Balance Credit column, and the Balance Sheet Credit column of the worksheet.
A) True
B) False
Answer: B
Explanation:
Diff: 1
Topic: Financial Statements
Learning Objective: 05-03 Complete the worksheet.
Bloom's: Remember
9) Preparation of a worksheet eliminates the necessity of preparing an income statement and a balance
sheet.
A) True
B) False
Answer: B
Explanation:
Diff: 1
Bloom's: Remember
10) In the Adjusted Trial Balance section of the worksheet the total debits should equal the total
credits.
A) True
B) False
Answer: A
Explanation:
Diff: 1
Bloom's: Remember
11) The balance of the owner's drawing account is extended to the Income Statement Debit column of
the worksheet.
A) True
B) False
Answer: B
Explanation:
Diff: 2
Bloom's: Remember
12) The balance of a liability account is extended to the Balance Sheet Credit column of the worksheet.
A) True
B) False
Answer: A
Explanation:
Diff: 1
Bloom's: Remember
13) The statement of owner's equity is prepared from the data in the Balance Sheet section of the
worksheet.
A) True
B) False
Answer: A
Explanation:
Diff: 2
Learning Objective: 05-04 Prepare an income statement, statement of owner's equity, and balance sheet from the completed worksheet.
Bloom's: Remember
14) If adjustments are entered on a worksheet, it is not necessary to record them in the journal or the
ledger.
A) True
B) False
Answer: B
Explanation:
Diff: 1
Learning Objective: 05-05 Journalize and post the adjusting entries.
Bloom's: Remember
15) Which of the following need not be completed separately if a worksheet is prepared?
A) a trial balance B) a balance sheet
C) an income statement D) a statement of owner's equity
Answer: A
Explanation: A)
B)
C)
D)
Diff: 1
Learning Objective: 05-01 Complete a trial balance on a worksheet.
Bloom's: Remember
16) When a trial balance is in balance,
A) adjusting entries are not required.
B) the company has earned a net income.
C) the general ledger is free of errors.
D) the debit account balances equal the credit account balances.
Answer: D
Explanation: A)
B)
C)
D)
Diff: 2
Learning Objective: 05-01 Complete a trial balance on a worksheet.
Bloom's: Remember
17) A total of $2,800 in supplies was purchased during the year. At the end of the year $700 of the
supplies were left. The adjusting entry needed at the end of the year is:
A) debit Supplies Expense $700; credit Supplies $700
D) debit Supplies $2,100; credit Supplies Expense $2,100
Answer: C
Explanation: A) $2,800 - $700 = $2,100
B) $2,800 - $700 = $2,100
C) $2,800 - $700 = $2,100
D) $2,800 - $700 = $2,100
Diff: 1
Bloom's: Apply
18) A total of $3,700 in supplies was purchased during the year. By the end of the year, the company
had used $2,200 of the supplies. The adjusting entry needed at the end of the year is:
A) debit Supplies $2,200; credit Supplies Expense $2,200
D) debit Supplies Expense $2,200; credit Supplies $2,200
Answer: D
Explanation: A) Since the problem stated that $2,200 had been used, that is the amount that needs
to be credited from the supplies account and recognized as an expense.
B) Since the problem stated that $2,200 had been used, that is the amount that needs
C) Since the problem stated that $2,200 had been used, that is the amount that needs
D) Since the problem stated that $2,200 had been used, that is the amount that needs
Diff: 1
Bloom's: Apply
19) MacGyver Company bought equipment on January 3, 2019, for $52,000. At the time of purchase,
the equipment was estimated to have a useful life of five years and a salvage value of $4,000.
Using the straight-line method, the amount of one year's depreciation is:
A) $1,200. B) $4,000. C) $9,600. D) $10,400.
Answer: C
Explanation: A) ($52,000 – $4,000)/5 years = $9,600 per year
B) ($52,000 – $4,000)/5 years = $9,600 per year
C) ($52,000 – $4,000)/5 years = $9,600 per year
D) ($52,000 – $4,000)/5 years = $9,600 per year
Diff: 1
Bloom's: Apply
20) Adjusting Entries are:
A) updating entries for previously unrecorded expenses or revenues.
B) corrections of errors.
C) not required.
D) will always affect cash.
Answer: A
Explanation: A)
B)
C)
D)
Diff: 1
Bloom's: Remember
21) Equipment costing $27,000 with an estimated salvage value of $2,040 and an estimated life of 4
years was purchased on October 31, 2019. Using the straight-line depreciation method, what is the
amount of depreciation expense to be recorded at December 31, 2019?
A) $520 B) $1,560 C) $1,125 D) $1,040
Answer: D
Explanation: A) ($27,000 – $2,040)/48 months = $520 per month * 2 months = $1,040
B) ($27,000 – $2,040)/48 months = $520 per month * 2 months = $1,040
C) ($27,000 – $2,040)/48 months = $520 per month * 2 months = $1,040
D) ($27,000 – $2,040)/48 months = $520 per month * 2 months = $1,040
Diff: 1
Bloom's: Apply
22) Which of the following entries records the depreciation on equipment for the fiscal year-end
adjustment?
A) Debit Depreciation; credit Depreciation Expense
B) Debit Depreciation Expense; credit Equipment
C) Debit Depreciation Expense; credit Accumulated Depreciation
D) Debit Accumulated Depreciation; credit Depreciation Expense
Answer: C
Explanation: A)
B)
C)
D)
Diff: 1
Bloom's: Remember
23) On January 1, ABC Catering purchased an oven for $5,000. The oven is expected to last five years
and have no salvage value. Select the adjusting entry made on December 31, to record the
depreciation of the oven for one year.
A)
Depreciation Expense $ 500
Accumulated Depreciation--Equipment $ 500
B)
Accumulated Depreciation-Equipment $ 500
Equipment $ 500
C)
Equipment $ 1,000
D)
Accumulated Depreciation-Equipment $ 1,000
Answer: D
Explanation: A) ($5,000-0)/5 years = $1,000
B) ($5,000-0)/5 years = $1,000
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C) ($5,000-0)/5 years =
$1,000 D) ($5,000-0)/5
Diff: 2 years = $1,000
Topic: The Worksheet; Financial Statements

Learning Objective: 05-02 Prepare adjustments for unrecorded business transactions.; 05-05 Journalize and post the adjusting entries.
Bloom's: Apply
24) On January 1, 2019, Johnson Consulting purchased a truck for $18,000. The truck is expected to
last 60 months and have no salvage value. Calculate the book value of the truck on December 31,
2020.
A) $3,600 B) $14,400 C) $7,200 D) $10,800
Answer: D
Explanation: A) ($18,000-0)/5 years = $3,600; (2 years * $3,600 = $7,200); $18,000 - $7,200 =
$10,800
B) ($18,000-0)/5 years = $3,600; (2 years * $3,600 = $7,200); $18,000 - $7,200 =
$10,800
C) ($18,000-0)/5 years = $3,600; (2 years * $3,600 = $7,200); $18,000 - $7,200 =
$10,800
D) ($18,000-0)/5 years = $3,600; (2 years * $3,600 = $7,200); $18,000 - $7,200 =
$10,800
Diff: 2
Bloom's: Apply
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25) On September 1, 2019, Jay Walker Company purchased a one-year insurance policy for $1,320.
The correct adjusting entry on December 31, 2019, is:
A) debit Prepaid Insurance $110; credit Insurance Expense $110
B) debit Insurance Expense $330; credit Prepaid Insurance $330
C) debit Prepaid Insurance $1,320; credit Insurance Expense $1,320
D) debit Insurance Expense $440; credit Prepaid Insurance $440
Answer: D
Explanation: A) $1,320/12 months = $110 per month * 4 months = $440
B) $1,320/12 months = $110 per month * 4 months = $440
C) $1,320/12 months = $110 per month * 4 months = $440
D) $1,320/12 months = $110 per month * 4 months = $440
Diff: 2
Bloom's: Apply
26) On November 1, 2019, Peaches Consulting Service paid $4,800 for 12 months of advance rent on
its office space. The correct adjusting entry on December 31, 2019, to show the amount of rent that
had expired would include:
A) debit Rent Expense $4,800; credit Prepaid Rent $4,800
B) debit Rent Expense $800; credit Prepaid Rent $800
C) debit Rent Expense $400; credit Prepaid Rent $400
D) debit Prepaid Rent $4,000; credit Rent Expense $4,000
Answer: B
Explanation: A) $4,800/12 months = $400 per month * 2 months = $800
B) $4,800/12 months = $400 per month * 2 months = $800
C) $4,800/12 months = $400 per month * 2 months = $800
D) $4,800/12 months = $400 per month * 2 months = $800
Diff: 2
Bloom's: Apply
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27) Equipment cost $36,000 and is expected to be useful for 5 years and have no salvage value. Under
the straight-line method, monthly depreciation will be:
A) $12. B) $600. C) $60. D) $720.
Answer: B
Explanation: A) ($36,000 – $0)/60 months = $600 per month
B) ($36,000 – $0)/60 months = $600 per month
C) ($36,000 – $0)/60 months = $600 per month
D) ($36,000 – $0)/60 months = $600 per month
Diff: 2
Bloom's: Apply
28) J. B. Consulting purchased a machine for $6,000 on August 1, 2019. The company expects the
useful life of the machine to be 5 years and no salvage value is expected. If the company uses the
straight-line method to depreciate the machine, what will be the depreciation adjustment for the
year ending December 31, 2019?
A) Debit Depreciation Expense $500 and Credit Equipment $500.
B) Debit Depreciation Expense $400 and Credit Accumulated Depreciation $400.
C) Debit Depreciation Expense $500 and Credit Accumulated Depreciation $500.
D) Debit Accumulated Depreciation $100 and Credit Depreciation Expense $100.
Answer: C
Explanation: A) ($6,000 – $0)/60 months = $100 per month; 5 months * $100 = $500
B) ($6,000 – $0)/60 months = $100 per month; 5 months * $100 = $500
C) ($6,000 – $0)/60 months = $100 per month; 5 months * $100 = $500
D) ($6,000 – $0)/60 months = $100 per month; 5 months * $100 = $500
Diff: 2
Bloom's: Apply
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29) On a worksheet, the adjusting entry to account for depreciation of equipment consists of:
A) a debit to Accumulated Depreciation and a credit to Equipment.
B) a debit to Depreciation Expense and a credit to Accumulated Depreciation.
C) a debit to Depreciation Expense and a credit to Equipment.
D) a debit to Accumulated Depreciation and a credit to Depreciation Expense.
Answer: B
Explanation: A)
B)
C)
D)
Diff: 2
Bloom's: Remember
30) If the prepaid expenses are not adjusted, assets on the balance sheet:
A) will be understated. B) will be overstated.
C) may be either overstated or understated. D) will not be affected.
Answer: B
Explanation: A)
B)
C)
D)
Diff: 3
Bloom's: Analyze
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31) If long-term assets are not adjusted, expenses on the income statement:
A) will be overstated. B) will be understated.
C) will not be affected. D) may be either overstated or understated.
Answer: B
Explanation: A)
B)
C)
D)
Diff: 3
Bloom's: Analyze
32) On October 25, 2019, the company paid $24,000 rent in advance for the six-month period
(November 2019 through April 2020). On December 31, 2019, the adjustment for expired rent
would include:
A) a $4,000 credit to Prepaid Rent. B) a $8,000 credit to Rent Expense.
C) a $8,000 debit to Rent Expense. D) a $24,000 credit to Cash.
Answer: C
Explanation: A) $24,000/6 months = $4,000 per month; 4,000/mo. * 2 months = $8,000
B) $24,000/6 months = $4,000 per month; 4,000/mo. * 2 months = $8,000
C) $24,000/6 months = $4,000 per month; 4,000/mo. * 2 months = $8,000
D) $24,000/6 months = $4,000 per month; 4,000/mo. * 2 months = $8,000
Diff: 2
Bloom's: Apply
14
33) On March 1, 2019, the company paid $6,000 rent in advance for a 12-month period. On December
31, 2019, the company's adjustment for expired rent would include:
A) a $6,000 debit to Prepaid Rent; a $6,000 credit to Rent Expense.
B) a $1,000 debit to Rent Expense; a $1,000 credit to Prepaid Rent.
C) a $5,000 debit to Rent Expense; a $5,000 credit to Prepaid Rent.
D) a $5,000 debit to Prepaid Rent; a $5,000 credit to Rent Expense.
Answer: C
Explanation: A) $6,000/12 months = $500 per month; ($500 * 10 months = $5,000)
B) $6,000/12 months = $500 per month; ($500 * 10 months = $5,000)
C) $6,000/12 months = $500 per month; ($500 * 10 months = $5,000)
D) $6,000/12 months = $500 per month; ($500 * 10 months = $5,000)
Diff: 2
Bloom's: Apply
34) On July 1, Sidney Consulting Services paid $18,000 for 12 months of advance rent on its office
building. Select the adjusting entry made on December 31, to record the amount of rent that had
expired during the year.
A)
B)
C)
D)
Answer: D
Explanation: A) $18,000/12 months = $1,500 per month; ($1,500 * 6 months = $9,000)
B) $18,000/12 months = $1,500 per month; ($1,500 * 6 months = $9,000)
15
C) $18,000/12 months = $1,500 per month; ($1,500 * 6 months =
$9,000) D) $18,000/12 months = $1,500 per month; ($1,500 * 6
Diff: 2 months = $9,000)

Bloom's: Apply
35) The balance in the Prepaid Rent account before adjustment at the end of the year is $12,000, which
represents 12 months rent paid on November 1. The adjusting entry required on December 31 to
show the amount of rent that had expired is:
A)
B)
C)
Cash $ 12,000
D)
Answer: B
Explanation: A) $12,000/12 months = $1,000 per month; ($1,000 * 2 months = $2,000)
B) $12,000/12 months = $1,000 per month; ($1,000 * 2 months = $2,000)
C) $12,000/12 months = $1,000 per month; ($1,000 * 2 months = $2,000)
D) $12,000/12 months = $1,000 per month; ($1,000 * 2 months = $2,000)
Diff: 2
Bloom's: Apply
16
36) The adjusting entry to account for the use of supplies consists of:
A) a debit to Supplies and a credit to Accumulated Depreciation.
B) a debit to Accumulated Depreciation and a credit to Supplies.
C) a debit to Supplies and a credit to Supplies Expense.
D) a debit to Supplies Expense and a credit to Supplies.
Answer: D
Explanation: A)
B)
C)
D)
Diff: 1
Bloom's: Remember
37) On December 31, Treats Catering Inc.'s trial balance shows a $1,000 balance in the Supplies
account. However, a physical count of the supplies determined that only $350 of supplies actually
remain in the supply cabinet. Select the adjusting entry made on December 31, to record the
amount of supplies that had been used during the year.
A)
Supplies Expense. $ 350
Supplies $ 350
B)
Supplies $ 350
C)
Supplies $ 650
D)
Supplies $ 650
Answer: C
Explanation: A) $1,000 - $350 = $650 of supplies had been used.
B) $1,000 - $350 = $650 of supplies had been used.
17
C) $1,000 - $350 = $650 of supplies had been used.
D) $1,000 - $350 = $650 of supplies had been used.
Diff: 2

Bloom's: Apply
38) During its first year of business, XYZ Inc. purchased $1,600 of supplies. By the end of the year,
only $500 of supplies remain in the supply cabinet. Determine the amount to be reported in the
Supplies account in the Adjusted Trial Balance section of the worksheet prepared on December 31.
A) $500 B) $1,600 C) $1,100 D) $2,100
Answer: A
Explanation: A) It is stated that $500 in supplies remain, therefore that is the adjusted supplies
balance.
B) It is stated that $500 in supplies remain, therefore that is the adjusted supplies
balance.
C) It is stated that $500 in supplies remain, therefore that is the adjusted supplies
balance.
D) It is stated that $500 in supplies remain, therefore that is the adjusted supplies
balance.
Diff: 1
Bloom's: Apply
39) Adjusting entries can be journalized:

A) only once per accounting quarter.
B) only once a month.
C) as often as necessary.
D) only once a year at the end of the accounting year.
Answer: C
Explanation: A)
B)
C)
D)
Diff: 2
Bloom's: Remember
18
40) The adjusting entry to account for the expiration of prepaid insurance consists of:
A) a debit to Accumulated Depreciation and a credit to Prepaid Insurance.
B) a debit to Insurance Expense and a credit to Prepaid Insurance.
C) a debit to Insurance Expense and a credit to Accumulated Depreciation.
D) a debit to Prepaid Insurance and a credit to Accumulated Depreciation.
Answer: B
Explanation: A)
B)
C)
D)
Diff: 2
Bloom's: Remember
41) The adjusting entry to account for the expiration of prepaid advertising consists of:
A) a debit to Prepaid Advertising and a credit to Accumulated Depreciation.
B) a debit to Prepaid Advertising and a credit to Advertising Expense.
C) a debit to Advertising Expense and a credit to Accumulated Depreciation.
D) a debit to Advertising Expense and a credit to Prepaid Advertising.
Answer: D
Explanation: A)
B)
C)
D)
Diff: 1
Bloom's: Remember
19
A) The book value of a long-term asset is reduced each year as depreciation is recorded.
B) Buildings and trucks are examples of long-term assets.
C) Salvage value is computed by subtracting the accumulated depreciation from the cost of a
long-term asset.
D) Generally accepted accounting principles require that the original cost of a long-term asset
continue to appear in the asset account until the disposition of the asset.
Answer: C
Explanation:
A)
B)
C)
D)
Diff: 2
Bloom's: Understand
43) On a worksheet, the adjusted balance of the Accumulated Depreciation account is extended to:
Answer: A
Explanation: A)
B)
C)
D)
Diff: 2
Bloom's: Understand
20
44) On a worksheet, the adjusted balance of the Depreciation Expense account is extended to:
Answer: A
Explanation: A)
B)
C)
D)
Diff: 1
Bloom's: Remember
45) On a worksheet, the adjusted balance of the Supplies account is extended to:
A) the Income Statement Debit column. B) the Balance Sheet Credit column.
Answer: D
Explanation: A)
B)
C)
D)
Diff: 1
Bloom's: Remember
46) On a worksheet, the adjusted balance of the Supplies Expense account is extended to:
A) the Balance Sheet Debit column. B) the Income Statement Debit column.
C) the Balance Sheet Credit column. D) the Income Statement Credit column.
Answer: B
Explanation: A)
B)
C)
D)
Diff: 1
Bloom's: Remember
21
47) Which of the following statements is correct?
A) Accumulated Depreciation--Equipment is presented in the Liabilities section of a balance
sheet.
B) The cost of supplies used is reported on the statement of owner's equity.
C) The cost of supplies used represents an operating expense of the business.
D) At the time of their acquisition, prepaid expenses are recorded in expense accounts.
Answer: C
Explanation: A)
B)
C)
D)
Diff: 2
Learning Objective: 05-02 Prepare adjustments for unrecorded business transactions.; 05-04 Prepare an income statement, statement of
owner's equity, and balance sheet from the completed worksheet.
Bloom's: Understand
48) On a worksheet, the adjusted balance of the Prepaid Rent account is extended to the:
A) Income Statement Debit column. B) Balance Sheet Credit column.
C) Balance Sheet Debit column. D) Income Statement Credit column.
Answer: C
Explanation: A)
B)
C)
D)
Diff: 1
Bloom's: Remember
22
49) On a worksheet, the adjusted balance of the revenue account Fees Income would be extended to:
Answer: C
Explanation: A)
B)
C)
D)
Diff: 1
Bloom's: Remember
50) On the worksheet, the Balance Sheet columns should balance:

A) after the net income amount is added to the Balance Sheet Credit column.
B) before the net income amount is added to the Balance Sheet Credit column.
C) before the net income amount is added to the Balance Sheet Debit column.
D) after the net income amount is added to the Balance Sheet Debit column.
Answer: A
Explanation: A)
B)
C)
D)
Diff: 2
Bloom's: Understand
23
51) On a worksheet, the adjusted balance of a contra asset account would be extended to:
Answer: D
Explanation: A)
B)
C)
D)
Diff: 2
Bloom's: Remember
52) On a worksheet, a net loss is:

A) recorded in the Income Statement Debit column.
B) not recorded.
C) recorded in the Balance Sheet Credit column.
D) recorded in the Balance Sheet Debit column.
Answer: D
Explanation: A)
B)
C)
D)
Diff: 2
Bloom's: Understand
24
53) If a worksheet is prepared at the end of the accounting year,
A) the financial statements are prepared using the worksheet data.
B) preparation of the financial statements is not required.
C) the adjusting entries do not need to be journalized.
D) only a balance sheet is required.
Answer: A
Explanation: A)
B)
C)
D)
Diff: 1
Bloom's: Remember

A) If an account has a debit balance in the Trial Balance section of the worksheet and there is a
credit entry in the Adjustments section, the credit amount is added when computing the
balance to be shown in the Adjusted Trial Balance section of the worksheet.
B) Net loss is recorded on the worksheet in the Income Statement Credit column and the Balance
Sheet Debit column.
C) Net income is recorded on the worksheet in the Income Statement Debit column and the
Balance Sheet Credit column.
D) The difference between the total of the Income Statement Debit column and the total of the
Income Statement Credit column of the worksheet represents either net income or net loss.
Answer: A
Explanation:
A)
B)
C)
D)
Diff: 2
Bloom's: Understand
25
55) On a balance sheet, Accumulated Depreciation—Equipment is reported:
A) as a contra-asset on the Balance Sheet. B) as a liability on the Income Statement.
C) as an expense on the Income Statement. D) as owner's equity on the Balance Sheet.
Answer: A
Explanation: A)
B)
C)
D)
Diff: 2
Bloom's: Remember
56) The book value of long-term assets is reported on:

A) the worksheet. B) the statement of owner's equity.
C) the income statement. D) the balance sheet.
Answer: D
Explanation: A)
B)
C)
D)
Diff: 2
Bloom's: Remember
26
57) The balance in the account Accumulated Depreciation, Equipment will:
A) be reported on the Statement of Owner's Equity.
B) will be reported on the Balance Sheet.
C) not appear on any financial statement.
D) be reported on the Income Statement.
Answer: B
Explanation: A)
B)
C)
D)
Diff: 1
Bloom's: Remember
58) A consecutive, twelve-month accounting period is called a(n):

A) adjusted year. B) fiscal year.
C) accounting year. D) accrual year.
Answer: B
Explanation: A)
B)
C)
D)
Diff: 1
Bloom's: Remember
AICPA: BB Industry; FN Reporting
27
59) Accumulated Depreciation, Equipment, is shown as:
A) an addition to expenses on the Income Statement.
B) a deduction of Capital on the Statement of Owner's Equity.
C) an addition to assets on the Balance Sheet.
D) a deduction from assets on the Balance Sheet.
Answer: D
Explanation: A)
B)
C)
D)
Diff: 1
Bloom's: Remember
60) The adjustments made on the worksheet:

A) need not be entered in the journal or the ledger.
B) are posted to the ledger but are not recorded in the journal.
C) are recorded in the journal but are not posted to the ledger.
D) are recorded in the journal and then posted to the general ledger accounts.
Answer: D
Explanation: A)
B)
C)
D)
Diff: 2
Learning Objective: 05-05 Journalize and post the adjusting entries.
Bloom's: Remember
28
the adjusting entry for the $2,300 of supplies used during the year, the adjusted net income is:
A) $46,850. B) $44,550. C) $49,150. D) $45,700.
Answer: B
Explanation: A) $46,850 - $2,300 = $44,550
B) $46,850 - $2,300 = $44,550
C) $46,850 - $2,300 = $44,550
D) $46,850 - $2,300 = $44,550
Diff: 3
Bloom's: Understand
the adjusting entries for the $1,620 of supplies used and $3,700 of depreciation on the company's
equipment for the year, the adjusted net income is:
A) $25,840. B) $18,440. C) $21,680. D) $29,080.
Answer: B
Explanation: A) $23,760 - $1,620 - $3,700 = $18,440
B) $23,760 - $1,620 - $3,700 = $18,440
C) $23,760 - $1,620 - $3,700 = $18,440
D) $23,760 - $1,620 - $3,700 = $18,440
Diff: 3
Bloom's: Understand
29
the adjusting entry for the $600 of prepaid advertising that expired and $1,600 in supplies used
during the year, the adjusted net income is:
A) $41,800. B) $39,600. C) $40,200. D) $41,200.
Answer: B
Explanation: A) $41,800 - $600 - $1,600 = $39,600
B) $41,800 - $600 - $1,600 = $39,600
C) $41,800 - $600 - $1,600 = $39,600
D) $41,800 - $600 - $1,600 = $39,600
Diff: 3
Bloom's: Understand
the adjusting entries for expired insurance during the year of $3,400 and for supplies used during
the year of $1,480, the adjusted net income is:
A) $69,796. B) $61,516. C) $64,916. D) $60,036.
Answer: D
Explanation: A) $64,916 - $3,400 - $1,480 = $60,036
B) $64,916 - $3,400 - $1,480 = $60,036
C) $64,916 - $3,400 - $1,480 = $60,036
D) $64,916 - $3,400 - $1,480 = $60,036
Diff: 3
Bloom's: Understand
30
65) The total assets on the balance sheet was $128,800 before journalizing and posting the adjusting
entries for $800 of expired insurance, $2,400 of expired rent and $900 of depreciation. What are
the total assets after journalizing and posting the adjusting?
A) $128,800. B) $124,700. C) $126,500. D) $132,900.
Answer: B
Explanation: A) $128,800 - $800 - $2,400 - $900 = $124,700
B) $128,800 - $800 - $2,400 - $900 = $124,700
C) $128,800 - $800 - $2,400 - $900 = $124,700
D) $128,800 - $800 - $2,400 - $900 = $124,700
Diff: 3
Bloom's: Understand
SHORT ANSWER QUESTIONS
66) The process of allocating the cost of a long-term asset as an expense of operations during the
asset's expected useful life is known as ________.
Answer: depreciation Explanation:
Diff: 1
Topic: Adjustments
Learning Objective: 05-02 Prepare adjustments for unrecorded business transactions.; 05-06
Bloom's: Remember
AACSB: Analytic
AICPA: BB Industry; FN Reporting; FN Measurement
67) The difference between the debit balance of the Equipment account and the credit balance of the
Accumulated Depreciation–Equipment account is called the ________ of an asset.
Answer: book value Explanation:
Diff: 2
Topic: Adjustments
Bloom's: Remember
AACSB: Analytic
31
68) The Supplies account had a balance of $1,200 when a physical count indicated that supplies on
hand totaled $250. This means that supplies in the amount of ________ were used during the
accounting period.
Answer: $950
Explanation: $1,200 - $250 = $950
Diff: 1
Topic: Adjustments
Bloom's: Remember
AACSB: Analytic
69) The process of updating accounts at the end of an accounting period for previously unrecorded
items that belong to the period is referred to as making ________.
Answer: adjustments or adjusting entries
Explanation:
Diff: 1
Topic: Adjustments
Learning Objective: 05-02 Prepare adjustments for unrecorded business transactions.; 05-06
Bloom's: Remember
AACSB: Analytic
70) The account credited in the adjusting entry made to record the expiration of a portion of prepaid
rent is the ________ account.
Answer: Prepaid Rent
Explanation:
Diff: 2
Topic: Adjustments
Bloom's: Remember
AACSB: Analytic
71) Accumulated depreciation is classified as a(n) ________ account.

Answer: contra-asset
Explanation:
Diff: 1
Topic: Adjustments
Bloom's: Remember
AACSB: Analytic
32
72) When the ________ method of depreciation is used, an equal amount of depreciation is charged to
each accounting period during the asset's useful life.
Answer: straight-line
Explanation:
Diff: 1
Topic: Adjustments
Bloom's: Remember
AACSB: Analytic
73) The account accumulated depreciation has a normal balance.

Answer: credit
Explanation:
Diff: 1
Topic: Adjustments
Bloom's: Remember
AACSB: Analytic
74) A(n) ________ is prepared at the end of each accounting period to organize and summarize the
data needed for the preparation of the financial statements.
Answer: worksheet
Explanation:
Diff: 1
Bloom's: Remember
AACSB: Analytic
75) On a worksheet, the adjusted balance of Supplies is extended from the Adjusted Trial Balance
Debit column to the ________ Debit column.
Answer: Balance Sheet
Explanation:
Diff: 1
Bloom's: Remember
AACSB: Analytic
33
76) On a worksheet, the adjusted balance of Depreciation Expense is extended from the Adjusted Trial
Balance Debit column to the ________ Debit column.
Answer: Income Statement
Explanation:
Diff: 1
Bloom's: Remember
AACSB: Analytic

B. Depreciation Expense
C. Equipment
D. Prepaid Rent
E. Rent Expense
F. Supplies
G. Supplies Expense
Answer: Account Debit Credit

A. Accumulated Deprecation Decrease Increase
B. Depreciation Expense Increase Decrease
C. Equipment Increase Decrease
D. Prepaid Rent Increase Decrease
E. Rent Expense Increase Decrease
F. Supplies Increase Decrease
G. Supplies Expense Increase Decrease
Explanation:
Diff: 1
Topic: The Worksheet; Adjustments
Bloom's: Remember
AACSB: Analytic
34

B. Advertising Expense
C. Depreciation Expense
D. Insurance Expense
E. Land
F. Prepaid Advertising
G. Prepaid Insurance
Answer: Account Debit Credit

A. Accumulated Deprecation Decrease Increase
B. Advertising Expense Increase Decrease
C. Depreciation Expense Increase Decrease
D. Insurance Expense Increase Decrease
E. Land Increase Decrease
F. Prepaid Advertising Increase Decrease
G. Prepaid Insurance Increase Decrease
Explanation:
Diff: 1
Bloom's: Remember
AACSB: Analytic
35
79) Read each of the following transactions for Patel's Repair Services. Determine the accounts and
amounts to be debited and credited in the necessary end-of-May adjustments.
A. On May 1, 2019, Patel's Repair Services, a new firm, paid $6,600 rent in advance for a six-month
period. The $6,600 was debited to the Prepaid Rent account.
B. On May 1, 2019, the firm bought supplies for $2,000. The $2,000 was debited to the Supplies
account. An inventory of supplies at the end of May showed that supplies costing $800 were on
hand.
C. On May 1, 2019, the firm bought equipment costing $12,000. The equipment has an expected
depreciation.
Answer: A. Rent Expense (dr.) $1,100; Prepaid Rent (cr.) $1,100
B. Supplies Expense (dr.) $1,200; Supplies (cr.) $1,200
C. Depreciation Expense (dr.) $100; Accumulated Depreciation (cr.) $100
Explanation: A. $6,600/6 months = $1,100 per month
B. $2,000 - $800 = $1,200 used
C. ($12,000 - $0)/120 months = $100 per month
Diff: 2
Bloom's: Apply
AACSB: Analytic
36
80) Read each of the following transactions for Pickerton Printer Repair Services. Determine the
accounts and amounts to be debited and credited in the necessary end-of-April adjustments.
A. On April 1, 2019, Pickerton Printer Repair Services, a new firm, bought supplies for $2,500. The
$2,500 was debited to the Supplies account. An inventory of supplies at the end of April showed that
supplies costing $1,500 were on hand.
B. On April 1, 2019, the firm bought equipment costing $25,000. The equipment has an expected
depreciation.
C. On April 1, 2019, the firm paid $7,200 rent in advance for a six-month period. The $7,200 was
Answer: A. Supplies Expense (dr.) $1,000; Supplies (cr.) $1,000
B. Depreciation Expense (dr.) $200; Accumulated Depreciation (cr.) $200
C. Rent Expense (dr.) $1,200; Prepaid Rent (cr.) $1,200
Explanation: A. $2,500-$1,500 = $1,000 used
B. ($25,000 - $1,000)/120 months = $200 per month
C. $7,200/6 months = $1,200 per month
Diff: 2
Bloom's: Apply
AACSB: Analytic
37
81) Read each of the following transactions for Gallagher Enterprises. Determine the accounts and
amounts to be debited and credited in the necessary end-of-January adjustments.
A. On January 1, 2019, Gallagher Enterprises, a new firm, paid $4,800 rent in advance for a
three-month period. The $4,800 was debited to the Prepaid Rent account.
B. On January 1, 2019, the firm bought supplies for $3,000. The $3,000 was debited to the Supplies
account. An inventory of supplies at the end of January showed that supplies costing $1,300 were on
hand.
C. On January 1, 2019, the firm bought equipment costing $15,000. The equipment has an expected
depreciation.
Answer: A. Rent Expense (dr.) $1,600; Prepaid Rent (cr.) $1,600
B. Supplies Expense (dr.) $1,700; Supplies (cr.) $1,700
C. Depreciation Expense (dr.) $140; Accumulated Depreciation (cr.) $140
Explanation: A. $4,800/3 months = $1,600 per month
B. $3,000 - $1,300 = $1,700 used
C. ($15,000 - $1,560)/96 months = $140 per month
Diff: 2
Bloom's: Apply
AACSB: Analytic
38
82) Read each of the following transactions for Enterprises Security Systems. Determine the accounts
and amounts to be debited and credited in the necessary end-of-July adjustments.
A. On July 1, 2019, Enterprises Security Systems, a new firm, bought supplies for $2,300. The
$2,300 was debited to the Supplies account. An inventory of supplies at the end of July showed that
supplies costing $900 were on hand.
B. On July 1, 2019, the firm bought equipment costing $24,000. The equipment has an expected
depreciation.
C. On July 1, 2019, the firm paid $4,500 rent in advance for a nine-month period. The $4,500 was
Answer: A. Supplies Expense (dr.) $1,400; Supplies (cr.) $1,400
B. Depreciation Expense (dr.) $200; Accumulated Depreciation (cr.) $200
C. Rent Expense (dr.) $500; Prepaid Rent (cr.) $500
Explanation: A. $2,300 - $900 = $1,400
B. ($24,000 - $0)/120 months = $200 per month
C. $4,500/9 = $500 per month
Diff: 2
Bloom's: Apply
AACSB: Analytic
39
83) Read the description of the following adjustments that are required at the end of the accounting
period for Riley Furniture Restoration. Determine the account and amount to be debited and the
account and amount to be credited.
A. Purchased supplies for $1,000 on June 1, 2019. Inventory of supplies was $300 on June 30,
2019. Record the adjustment for the amount of the supplies used during the month of June 2019.
B. Signed a 4-month contract for $1,200 of prepaid advertising on June 1, 2019. Record the
adjustment for the amount of the advertising contract that expired during the month of June 2019.
C. Prepaid rent for one year on June 1, 2019, in the amount of $12,600.
D. Depreciation is computed using the straight-line method. Equipment purchased on June 1, 2019,
June 30, 2019.
Answer: A. Debit Supplies Expense, $700; credit Supplies, $700
B. Debit Advertising Expense, $300; credit Prepaid Advertising, $300
C. Debit Rent Expense, $1,050; credit Prepaid Rent, $1,050
D. Debit Depreciation Expense--Equipment, $280; credit Accumulated
Depreciation--Equipment, $280
Explanation: A. $1,000 - $300 = $700 used
B. $1,200/4 = $300 per month
C. $12,600/12 = $1,050 expired
D. ($16,800-$0)/60 months = $280 per month
Diff: 2
Bloom's: Apply
AACSB: Analytic
40
A. Purchased supplies for $2,000 on November 1, 2019. Inventory of supplies was $600 on
November 30, 2019. Record the adjustment for the amount of the supplies that were used during the
month of November 2019.
B. Signed a 4-month contract for $2,400 of prepaid advertising on November 1, 2019. Record the
adjustment for the amount of the advertising contract that expired during the month of November
2019.
C. Prepaid rent for the year on November 1, 2019. Rent expired during the month of November
2019, $1,500. Record the adjustment on November 30, 2019.
D. Depreciation is computed using the straight-line method. Equipment purchased on November 1,
2019, for $6,000 has an estimated useful life of 5 years with no salvage value. Record the adjustment
on November 30, 2019.
Answer: A. Debit Supplies Expense, $1,400; credit Supplies, $1,400
B. Debit Advertising Expense, $600; credit Prepaid Advertising, $600
C. Debit Rent Expense, $1,500; credit Prepaid Rent, $1,500
D. Debit Depreciation Expense--Equipment, $100; credit Accumulated
Explanation: A. $2,000 - $600 = $1,400
B. $2,400/4 = $600 per month
C. $1,500 expired
D. ($6,000 - $0)/60 months = $100 per month
Diff: 2
Bloom's: Apply
AACSB: Analytic
41
A. Prepaid rent for the year on April 1, 2019. Rent expired during the month of April 2019, $3,500.
Record the adjustment on April 30, 2019.
B. Purchased supplies for $2,000 on April 1, 2019. Inventory of supplies was $1,600 on April 30,
2019. Record the adjustment for the amount of the supplies that were used during the month of April
2019.
C. Depreciation is computed using the straight-line method. Equipment purchased on April 1, 2019,
April 30, 2019.
D. Signed a 6-month contract for $2,400 of prepaid advertising on April 1, 2019. Record the
adjustment for the amount of the contract that expired during the month of April 2019.
Answer:
A. Debit Rent Expense, $3,500; credit Prepaid Rent, $3,500
B. Debit Supplies Expense, $400; credit Supplies, $400
C. Debit Depreciation Expense--Equipment, $300; credit Accumulated
D. Debit Advertising Expense, $400; credit Prepaid Advertising, $400
Explanation: A. $3,500 expired
B. $2,000 - $1,600 = $400
C. ($18,000 - $0)/60 = $300 per month
D. $2,400/6 = $400
Diff: 2
Bloom's: Apply
AACSB: Analytic
42
for Drake Consulting Services. Determine the account and amount to be debited and the account and
A. Prepaid rent for one year on January 1, 2019, in the amount of $26,400. Record the adjustment
B. Purchased supplies for $1,600 on January 1, 2019. The inventory of supplies was $400 on
January 31, 2019. Record the adjustment for the amount of the supplies that were used during the
month of January 2019.
2019, for $36,000 has an estimated useful life of 6 years with no salvage value. Record the
adjustment on January 31, 2019.
D. Signed a 12-month contract for $3,000 of prepaid advertising on January 1, 2019. Record the
adjustment for the amount of the advertising contract that expired during the month of January 2019.
Answer: A. Debit Rent Expense, $2,200; credit Prepaid Rent, $2,200
B. Debit Supplies Expense, $1,200; credit Supplies, $1,200
C. Debit Depreciation Expense--Equipment, $500; credit Accumulated
D. Debit Advertising Expense, $250; credit Prepaid Advertising, $250
Explanation: A. ($26,400/12 = $2,200 expired
B. $1,600 - $400 = $1,200
C. ($36,000 - $0)/72 months = $500 per month
D. $3,000/12 = $250
Diff: 2
Bloom's: Apply
AACSB: Analytic
for AAA Appliance Repair Services. Record the necessary adjusting entries required at the end of
January on page 2 of a general journal. Omit the descriptions.
$2,000.
31, 2019.
43
Answer: GENERAL JOURNAL
PAGE 2
DATE DESCRIPTION P.R. DEBIT CREDIT
1/31 Rent Expense 2,000
Prepaid Rent 2,000
1/31 Supplies Expense 6,000

Supplies 6,000
1/31 Depreciation Expense 250

Accumulated Depreciation 250
1/31 Advertising Expense 200

Prepaid Advertising 200

B. $7,600 - $1,600 = $6,000
C. ($15,000 - $0)/60 = $250
D. $600/3 = $200
Diff: 2
Topic: Adjustments
Bloom's: Apply
AACSB: Analytic
for Anise's Repair Services. Record the necessary adjusting entries required at the end of January on
page 2 of a general journal. Omit the descriptions.
$1,600.
31, 2019.
44
PAGE 2
Prepaid Rent 1,600
1/31 Supplies Expense 2,800

Supplies 2,800



B. $4,000 - $1,200 = $2,800
C. ($3,000 - $0)/60 = $50
D. $450/3 = $150
Diff: 2
Topic: Adjustments
Bloom's: Apply
AACSB: Analytic
for Paulo Consulting Services. Record the necessary adjusting entries required at the end of January
on page 2 of a general journal. Omit the descriptions.
A. Equipment was purchased on January 1, 2019, for $60,000 and has an estimated useful life of 7
years with a salvage value of $3,720. Depreciation is computed using the straight-line method.
B. Signed a 5-month contract for $4,500 of prepaid advertising on January 1, 2019.
C. Prepaid rent for the year on January 1, 2019, in the amount of $22,200.
D. Purchased supplies for $3,200 on January 1, 2019. Inventory of supplies was $2,800 on January
31, 2019.
45
PAGE 2


Prepaid Rent 1,850
1/31 Supplies Expense 400

Supplies 400
Explanation: A. ($60,000 - $3,720)/84 = $670

B. $4,500/5 = $900
C. $22,200/12 = $1,850 expired
D. $3,200 - $2,800 = $400
Diff: 2
Topic: Adjustments
Bloom's: Apply
AACSB: Analytic
for River Front Repair. Record the necessary adjusting entries required at the end of January on page
2 of a general journal. Omit the descriptions.
A. Prepaid rent for the year on January 1, 2019. Rent expired during the month of January, $7,200.
B. Equipment purchased on January 1, 2019, for $8,100 has an estimated useful life of 5 years with
no salvage value. Depreciation is computed using the straight-line method.
C. Purchased supplies for $650 on January 1, 2019. Inventory of supplies was $100 on January 31,
2019.
D. Signed a 12-month contract for $4,800 of prepaid advertising on January 1, 2019.
46
PAGE 2
Prepaid Rent 7,200

1/31 Supplies Expense 550

Supplies 550


B. ($8,100 - $0)/60 = $135
C. $650 - $100 = $550
D. $4,800/12 = $400
Diff: 2
Topic: Adjustments
Bloom's: Apply
AACSB: Analytic
91) The balances of the ledger accounts for Oleman Services on January 31, 2019, and the information

Cash $6,500
Supplies 1,200
Equipment 7,500
Accumulated Depreciation -Equipment --
Jeff Oleman, Capital 17,500
Jeff Oleman, Drawing 1,500
Fees Income 9,500
Rent Expense 1,200
Supplies Expense --
(a) The supplies were purchased on January 1, 2019. An inventory of supplies showed $600 on hand
(b) The amount of Prepaid Insurance represents a payment made January 1, 2019, for a six-month
insurance policy.
(c) The equipment, purchased January 1, 2019, has an estimated useful life of 5 years with no
OLEMAN SERVICES
Worksheet

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
48
OLEMAN SERVICES

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Answer: OLEMAN SERVICES

Worksheet

1 Cash 6,500
2 Accounts Receivable 3,500
3 Supplies 1,200 (a) 600
4 Prepaid Insurance 3,000 (b) 500
5 Equipment 7,500
49
Answer:5 Equipment 7,500
6 Accum. Depr.–Equip. (c) 125
7 Accounts Payable 3,400
8 Jeff Oleman, Capital 17,500
9 Jeff Oleman, Drawing 1,500
10 Fees Income 9,500
11 Advertising Expense 600
12 Rent Expense 1,200
13 Salaries Expense 5,000
14 Supplies Expense (a) 600
15 Insurance Expense (b) 500
16 Utilities Expense 400
17 Depr. Exp.–Equip. (c) 125
18 Totals 30,400 30,400 1,225 1,225
19 Net Income
20
OLEMAN SERVICES

1 6,500 6,500
2 3,500 3,500
3 600 600
4 2,500 2,500
5 7,500 7,500
6 125 125
7 3,400 3,400
8 17,500 17,500
9 1,500 1,500
10 9,500 9,500
11 600 600
12 1,200 1,200
13 5,000 5,000
14 600 600
15 500 500
16 400 400
17 125 125
50
Answer: 17 125 125
18 30,525 30,525 8,425 9,500 22,100 21,025
19 1,075 1,075
20 9,500 9,500 22,100 22,100
Explanation: A. $1,200 - $600 = $600

B. $3,000/6 = $500
C. ($7,500 - $0)/60 = $125
Diff: 3
Learning Objective: 05-01 Complete a trial balance on a worksheet.; 05-02 Prepare adjustments for unrecorded business transactions.;
05-03 Complete the worksheet.
Bloom's: Create
AACSB: Analytic
AICPA: BB Industry; BB Critical Thinking; FN Reporting; FN Measurement; FN Decision Making
92) The balances of the ledger accounts for Buffet Services on September 30, 2019, and the information

Cash $13,000
Supplies 2,400
Equipment 15,000
Jane Buffet, Capital 35,000
Jane Buffet, Drawing 3,000
Fees Income 19,000
Advertising Expense 1,200
Rent Expense 2,400
Supplies Expense --
(a) The supplies were purchased on September 1, 2019. An inventory of supplies showed $1,200 on
hand on September 30, 2019.
(b) The amount of Prepaid Insurance represents a payment made September 1, 2019, for a six-month
51
insurance policy.
(c) The equipment, purchased September 1, 2019, has an estimated useful life of 5 years with no
BUFFET SERVICES
Worksheet

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
BUFFET SERVICES

1
2
3 52
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Answer: BUFFET SERVICES

Worksheet

1 Cash $13,000
3 Supplies 2,400 (a) 1,200
4 Prepaid Insurance 6,000 (b) 1,000
5 Equipment 15,000
7 Accounts Payable 6,800
8 Jane Buffet, Capital 35,000
9 Jane Buffet, Drawing 3,000
11 Advertising Expense 1,200
12 Rent Expense 2,400
14 Supplies Expense -- 53 (a) 1,200
Answer: 14 Supplies Expense -- (a) 1,200
15 Insurance Expense -- (b) 1,000
17 Depr. Exp.–Equip. -- (c) 250
18 Totals 60,800 60,800 2,450 2,450
19 Net Income
20
BUFFET SERVICES

1 $13,000 13,000
2 7,000 7,000
3 1,200 1,200
4 5,000 5,000
5 15,000 15,000
6 250 250
7 6,800 6,800
8 35,000 35,000
9 3,000 3,000
10 19,000 19,000
11 1,200 1,200
12 2,400 2,400
13 10,000 10,000
14 1,200 1,200
15 1,000 1,000
16 800 800
17 250 250
18 61,050 61,050 16,850 19,000 44,200 42,050
19 2,150 2,150
20 19,000 19,000 44,200 44,200
Explanation: A. $2,400 - $1,200 = $1,200

B. $6,000/6 = $1,000
C. ($15,000 - $0)/60 = $250
54
Din
A ffs
:w3 er:
Bloom's: Apply
AACSB: Analytic
AICPA: BB Critical Thinking; BB Industry; FN Reporting; FN Measurement; FN Decision Making
93) The balances of the ledger accounts for Lance's Landscaping Design on March 31, 2019, and the
information needed for adjustments are shown below. Prepare the Trial Balance section, record the
adjustments, and complete the worksheet.

Cash $3,250
Supplies 600
Equipment 3,000
Accounts Payable 950
Lance, Capital 8,750
Lance, Drawing 750
Fees Income 4,750
Rent Expense 600
Supplies Expense --
(a) The supplies were purchased on March 1, 2019 An inventory of supplies showed $300 on hand
on March 31, 2019.
(b) The amount of Prepaid Insurance represents a payment made March 1, 2019, for a six-month
insurance policy.
(c) The equipment, purchased March 1, 2019, has an estimated useful life of 5 years with no salvage
value. The firm uses the straight-line method of depreciation.

Worksheet

55
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20


1
2
3
4
5
6
7
8
9
10
56
10
11
12
13
14
15
16
17
18
19
20
Answer: LANCE'S LANDSCAPING DESIGN

Worksheet

1 Cash 3,250
3 Supplies 600 (a) 300
5 Equipment 3,000
7 Accounts Payable 950
8 Lance, Capital 8,750
9 Lance, Drawing 750
12 Rent Expense 600
14 Supplies Expense -- (a) 300
15 Insurance Expense -- (b) 250
18 Totals 14,450 14,450 600 600
19 Net Income
20
57
Answ
er: LANCE'S LANDSCAPING DESIGN
Worksheet

1 Cash 3,250
3 Supplies 600 (a) 300
5 Equipment 3,000
7 Accounts Payable 950
8 Lance, Capital 8,750
9 Lance, Drawing 750
12 Rent Expense 600
14 Supplies Expense -- (a) 300
15 Insurance Expense -- (b) 250
18 Totals 14,450 14,450 600 600
19 Net Income
20
Explanation: A. $600 - $300 = $300

B. $1,500/6 = $250
C. ($3,000 - $0)/60 = $50
Diff: 3
Bloom's: Create
AACSB: Analytic
58
94) The partial worksheet for the Lorado Insurance Agency for the month ended October 31, 2019, is

Cash 9,000
Supplies 5,500
Equipment 30,000
Ashleigh Lorado, Drawing 2,000
Fees Income 23,300
Rent Expense 1,000
Totals 14,800 23,300 57,500 49,000
Net Income 8,500 8,500
23,300 23,300 57,500 57,500
Answer: LORADO INSURANCE AGENCY

Income Statement
Month Ended October 31, 2019
Revenue
Fees Income $23,300
Expenses
Salaries Expense $12,200
Rent Expense 1,000
Depreciation Expense--Equipment 1,000
Total Expenses 14,800
Net Income $ 8,500
LORADO INSURANCE AGENCY

Statement of Owner's Equity
Month Ended October 31, 2019
Ashleigh Lorado, Capital, Oct. 1, 2019 $32,000

Net Income for October 59 $8,500
Answer:Net Income for October $8,500
Less Withdrawals for October 2,000
Increase in Capital 6,500
Ashleigh Lorado, Capital, Oct. 31, $38,500
2019
LORADO INSURANCE AGENCY

Balance Sheet
October 31, 2019
ASSETS
Cash $9,000
Supplies 5,500
Equipment $30,000
Less: Accumulated Depreciation 8,000 22,000
Total Assets $47,500
LIABILITIES AND OWNER'S EQUITY

Liabilities
Owner's Equity
Total Liabilities and Owner's Equity $47,500
Explanation:
Diff: 2
Bloom's: Create
AACSB: Analytic
95) The partial worksheet for the Marion Consulting Services for the month ended January 31, 2019, is

Cash 18,000
Supplies 11,000
Equipment 60,000
Accum. Depr.--Equip. 60 16,000
Mary Marion, Drawing 4,000
Fees Income 46,600
Rent Expense 2,000
Totals 29,600 46,600 115,000 98,000
Net Income 17,000 17,000 46,600 46,600
115,000 115,000
Answer: MARION CONSULTING SERVICES

Income Statement
Revenue
Fees Income $46,600
Expenses
Salaries Expense $24,400
Rent Expense 2,000
Depreciation Expense--Equipment 2,000
Total Expenses 29,600
Net Income $ 17,000
MARION CONSULTING SERVICES

Statement of Owner's Equity
Mary Marion, Capital, Jan. 1, 2019 $64,000

Net Income for January $17,000
Less Withdrawals for January 4,000
Increase in Capital 13,000
Mary Marion, Capital, Jan. 31, 2019 $77,000
MARION CONSULTING SERVICES

Balance Sheet
January 31, 2019
ASSETS
61
Answer:ASSETS
Cash $18,000
Supplies 11,000
Equipment $60,000
Less Accumulated Depreciation 16,000 44,000
Total Assets $95,000
LIABILITIES AND OWNER'S EQUITY

Liabilities
Owner's Equity
Total Liabilities and Owner's Equity $95,000
Explanation:
Diff: 2
Bloom's: Create
AACSB: Analytic
96) Match the accounting terms with the description by entering the proper letter in the space provided.
A. Account form balance sheet
B. Adjusting entries or adjustments
C. Book value
D. Contra account
E. Contra asset account
F. Depreciation
G. Prepaid expenses
H. Report form balance sheet
I. Salvage value
J. Straight-line depreciation
K. Worksheet
1. Allocation of an asset's cost in equal amounts to each accounting period of the asset's
useful life
2. Journal entries made to update accounts for items that were used or expired during the
accounting period
________ 3. An estimate of the amount that could be received by selling or disposing of an asset at
the end of its useful life
62
________ 4. A balance sheet that lists assets on the left and liabilities and owner's equity on the right
5. An account with a normal balance that is opposite that of a related account
________ 6. A form used to gather all data needed at the end of an accounting period to prepare
financial statements
________ 7. That portion of an asset's original cost that has not yet been depreciated
________ 8. Expense items acquired, recorded, and paid for in advance of their use
________ 9. An asset account with a credit balance, which is contrary to the normal balance of an
asset account
10. A balance sheet that lists the asset accounts first, followed by liabilities and owner's
equity
________ 11. Allocation of the cost of a long-term asset to operations during its
expected useful life
Answer: (1) J, (2) B, (3) I, (4) A, (5) D, (6) K, (7) C, (8) G, (9) E, (10) H, (11) F
Explanation:
Diff: 2
Topic: The Worksheet; Assets, Liabilities, Equity; Adjustments; Financial Statements
Learning Objective: 05-01 Complete a trial balance on a worksheet.; 05-02 Prepare adjustments for unrecorded business
transactions.; 05-03 Complete the worksheet.; 05-04 Prepare an income statement, statement of owner's equity,
and balance sheet from the completed worksheet.; 05-06
Bloom's:
Remember
AACSB: Analytic
AICPA: BB Industry; FN Reporting; FN Measurement; FN Decision Making
63

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Chapter 05 Adjustments and the Worksheet

MULTIPLE CHOICE QUESTIONS

5) The normal balance of a contra asset account is a debit.

7) Land is a long-term asset that is not subject to depreciation.

16) When a trial balance is in balance,

20) Adjusting Entries are:

39) Adjusting entries can be journalized:

42) Which of the following statements is not correct?

47) Which of the following statements is correct?

50) On the worksheet, the Balance Sheet columns should balance:

52) On a worksheet, a net loss is:

53) If a worksheet is prepared at the end of the accounting year,

54) Which of the following statements is not correct?

55) On a balance sheet, Accumulated Depreciation—Equipment is reported:

57) The balance in the account Accumulated Depreciation, Equipment will:

58) A consecutive, twelve-month accounting period is called a(n):

59) Accumulated Depreciation, Equipment, is shown as:

60) The adjustments made on the worksheet:

SHORT ANSWER QUESTIONS

71) Accumulated depreciation is classified as a(n) ________ account.

73) The account accumulated depreciation has a normal balance.

Account Debit Credit

Account Debit Credit

Account Name Balance

TRIAL BALANCE ADJUSTMENTS

ADJ. TRIAL BAL. INCOME STATEMENT BALANCE SHEET

Account Name Balance

TRIAL BALANCE ADJUSTMENTS

ADJ. TRIAL BAL. INCOME STATEMENT BALANCE SHEET

Account Name Balance

LANCE'S LANDSCAPING DESIGN

TRIAL BALANCE ADJUSTMENTS

LANCE'S LANDSCAPING DESIGN

ADJ. TRIAL BAL. INCOME STATEMENT BALANCE SHEET

INCOME STATEMENT BALANCE SHEET

INCOME STATEMENT BALANCE SHEET

MULTIPLE CHOICE QUESTIONS

5) The normal balance of a contra asset account is a debit.

Topic: The Worksheet; Financial Statements

Topic: The Worksheet; Financial Statements

Topic: The Worksheet; Financial Statements

39) Adjusting entries can be journalized:

50) On the worksheet, the Balance Sheet columns should balance:

52) On a worksheet, a net loss is:

54) Which of the following statements is not correct?

56) The book value of long-term assets is reported on:

58) A consecutive, twelve-month accounting period is called a(n):

60) The adjustments made on the worksheet:

SHORT ANSWER QUESTIONS

71) Accumulated depreciation is classified as a(n) ________ account.

73) The account accumulated depreciation has a normal balance.

Account Debit Credit

Answer: Account Debit Credit

Account Debit Credit

Answer: Account Debit Credit

1/31 Supplies Expense 6,000

1/31 Depreciation Expense 250

1/31 Advertising Expense 200

Explanation: A. $2,000 expired

1/31 Supplies Expense 2,800