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Exam 3: Preparing Financial Statements

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Question 61

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On December 31, the balance in the Prepaid Advertising account was $176,000, which is the remaining balance of a 12-month advertising campaign purchased on August 31 in the current year. Assuming the cost is spread equally over each month, how much did this advertising campaign cost in total?

A) $286,000
B) $176,000
C) $264,000
D) $154,000
E) $22,000

F) C) and D)
G) A) and C)

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Question 62

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What is the usual order in which financial statements are prepared from the adjusted trial balance? Why are they prepared in that order?

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The income statement is prepared first. ...

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Question 63

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Which of the following accounts would not be on the post- closing trial balance?

The summary amounts below appear in the Income Statement and Balance Sheet columns of a company's December 31 work sheet. Prepare the necessary closing entries.

A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below. What amount will be posted to Retained Earnings in the process of closing the Income Summary account? (Assume all accounts have normal balances.) $\begin{array} { | l | r | } \hline \text { Retained earnings } & \$ 7,000 \\\hline \text { Dividends } & 9,600 \\\hline \text { Service Reverne } & 29,000 \\\hline \text { Rent expense } & 3,600 \\\hline \text { Salaries expense } & 7,200 \\\hline \text { Insurance expense } & 920 \\\hline \text { Depr Expense - equipment } & 500 \\\hline \text { Accum depr - equipment } & 1,500 \\\hline\end{array}$

Due to an oversight, a company made no adjusting entry for accrued and unpaid employee wages of $24,000 on December 31. This oversight would:

If a company forgot to record depreciation on office equipment at the end of an accounting period, the financial statements prepared at that time would show:

On April 1, 2014, a company paid $1,350 premium on a three-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the year ended December 31, 2014?

During the year, Able Co. purchased $23,750 worth of supplies, at the end of the year, the supplies expense on the adjusted trial balance was $29,340 and the balance sheet showed a balance of $810 in the supplies account. What was the supplies balance at the beginning of the year?

Interim financial statements refer to financial reports:

A company issued financial statements for the year ended December 31 but failed to include the following adjusting entries: A. Accrued service fees earned of $2,200. B. Depreciation expense of $8,000. C. Portion of office supplies (an asset) used, $3,100. D. Accrued salaries of $5,200. E. Revenues of $7,200, originally recorded as unearned, have been earned by the end of the year. Determine the correct amounts for the December 31 financial statements by completing the following table:

What is the purpose of a post-closing trial balance?

During the year, Able Co. purchased $39,600 worth of supplies, at the end of the year, the balance sheet showed a balance of $1,760 in the Supplies account. Prepare the necessary adjusting entry.

Which of the following is the usual final step in the accounting cycle?

On January 1 a company purchased a five-year insurance policy for $1,800 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account and the company records adjustments only at year-end, the adjusting entry at the end of the first year is:

The Income Summary account is used to close the permanent accounts at the end of an accounting period.

Depreciation expense is an example of an accrued expense.

Calculate the current ratio in each of the following separate cases.

Western Company had $500 of store supplies available at the beginning of the current year. During the year Western Company purchased $2,750 worth of store supplies. On December 31 of this year, $375 worth of store supplies remained. a. Calculate the amount of Western Company's store supplies expense for the current year. (Show your calculations.) b. Prepare the journal entry to adjust the supplies account.

How is a classified balance sheet different from an unclassified balance sheet? List the order of the usual classifications on a classified balance sheet.