More Practice for the Final Exam Adjusting Entries

Key

1.Bland Foods purchased a two-year fire and extended coverage insurance policy on
August 1, 2003, and charged the $4,200 premium to Insurance expense. At
its December 31, 2003, year-end, Bland Foods would record which of the
following adjusting entries?

2.The employees of Neat Clothes work Monday through Friday. Every other Friday the
company issues payroll checks totaling $32,000. The current pay period
ends on Friday, July 3. Neat Clothes is now preparing quarterly financial
statements for the three months ended June 30. What is the adjusting entry
to record accrued salaries at the end of June?

3.On September 1, 2003, Time Magazine sold 600 one-year subscriptions for $81 each.
The total amount received was credited to Unearned subscriptions
revenue. What would be the required adjusting entry at December 31,
2003?

4.On December 31, 2002, Typical Fashions had balances in its Accounts receivable and
Allowance for uncollectible accounts of $48,400 and $940, respectively.
During 2003, Typical Fashions wrote off $820 in Accounts receivable and
determined that there should be an Allowance for uncollectible accounts
of $1,140 at December 31, 2003. Bad debt expense for 2003 would be:

5.Fink Insurance collected premiums of $18,000,000 from its customers during the
current year. The adjusted balance in the Unearned premiums account
increased from $6 million to $8 million dollars during the year. What was
Fink's revenues from earned insurance premiums for the current year?

6. Anderson Architects

The transactions for the year 2000 for Anderson Architects have already been recorded. This
problem shows how to prepare adjusting entries for December 2000.

Dec. 31 A note payable of $6,000 has been outstanding since September 1, 2000. Under
the terms of the note, the note plus interest (12%) is to be paid on March 1, 2001.
No interest has been recorded on the note.

Dec. 31 Wages of $650 for December will be paid in January.

Dec. 31 Services were performed for a client for $800. The client has not been billed yet.
Dec. 31 Advertising costs of $105 for December will be paid in January.
7.
Practice Problem 1
Comfort Furniture Company

The transactions for the year 2000 for Comfort Furniture Co. have been recorded in the
accounting system. This assignment requires you to prepare adjusting entries for Comfort
Furniture Co. for December 2000.

Dec. 31 Wages owed but unpaid at the end of December were $5,000.

Dec. 31 The company signed a 12%, six-month note for $6,000 on November 1, 2000.
No interest has been recorded for November and December.

Dec. 31 Service provided to a customer for $350 has not been recorded.

Dec. 31 Advertising cost of $90 for December has not been recorded.

DATE ACCOUNT DEBIT CREDIT

2000
Dec. 31 Wages Expense 5,000
Wages Payable 5,000
Dec. 31 Interest Expense 120
Interest Payable 120
Dec. 31 Accounts Receivable 350
Service Revenue 350
Dec. 31 Advertising Expense 90
Accounts Payable 90
8.

Practice Assignment 2
Conway Floor Covering Incorporated

The transactions for Conway Floor Covering Inc. for the year 2000 have been recorded in the
accounting system. This assignment requires you to record the adjusting entries for December
2000.

Dec. 31 Performed services for a client for $850. The customer will be billed in January.

Dec. 31 $15,000 was borrowed by signing a 10%, 2 year note on September 1, 2000.
Record the interest on the note.

Dec. 31 Employee wages of $950 for December will be paid in January.

Dec. 31 Advertising costs of $95 for December will be paid in January.

DATE ACCOUNT DEBIT CREDIT

2000
Dec. 31 Accounts Receivable 850
Service Revenue 850
Dec. 31 Interest Expense 500
Interest Payable 500
Dec. 31 Wages Expense 950
Wages Payable 950
Dec. 31 Advertising Expense 95
Accounts Payable 95
 9. Homework Problem 1
Gym on Wheels

Gym on Wheels provides gymnastics lessons at various daycare centers. The transactions for the
year 2000 have been recorded in the accounting system. This assignment requires you to prepare
adjusting entries for December 2000.

Dec. 31 The note payable of $8,000 has been outstanding since July 1, 2000. Under the
terms of the note, the note plus interest (12%) is to be paid on July 1, 2001. No
interest has been recorded on the note.

Dec. 31 Instructors’ salaries of $2,000 for December will be paid in January.

Dec. 31 December fees of $160 will be collected in January.

Dec. 31 $85 will be paid in January for advertising in December.

DATE ACCOUNT DEBIT CREDIT

2000
Dec. 31 Interest Expense 480
Interest Payable 480
Dec. 31 Salaries Expense 2,000
Salaries Payable 2,000
Dec. 31 Accounts Receivable 160
Service Revenue 160
Dec. 31 Advertising Expense 85
Accounts Payable 85
10.

Homework Problem 2
Borden Realty

The transactions for Borden Realty for the year 2000 have been recorded in the accounting
system. This assignment requires you to prepare adjusting entries for December 2000.

Dec. 31 Services provided to customers for $2,600 were unrecorded at the end of
December.

Dec. 31 $115 will be paid in January for advertising in December.

Dec. 31 $1,080 of salaries earned by employees during December will be paid in

January.

Dec. 31 The note payable of $12,000 has been outstanding since September 1, 2000.
Under the terms of the note, the note plus interest (10%) is to be paid on
September 1, 2001. No interest has been recorded on the note.

DATE ACCOUNT DEBIT CREDIT

2000
Dec. 31 Accounts Receivable 2,600
Service Revenue 2,600
Dec. 31 Advertising Expense 115
Accounts Payable 115
Dec. 31 Salaries Expense 1,080
Salaries Payable 1,080
Dec. 31 Interest Expense 400
Interest Payable 400
11.

Homework Problem 3
Party Town Incorporated

The transactions for Party Town Inc. for the year 2000 have been recorded in the accounting
system. This assignment requires you to prepare adjusting entries for December 2000.

Dec. 31 A birthday party was arranged in December. The customer will pay $200 in
January.

Dec. 31 Party Town Inc. borrowed $20,000 by signing a 12%, 2 year note on July 1,
2000. Record the interest on the note.

Dec. 31 Employee wages of $750 for December will be paid in January.

Dec. 31 Advertising costs of $135 for December will be paid in January.

DATE ACCOUNT DEBIT CREDIT

2000
Dec. 31 Accounts Receivable 200
Service Revenue 200
Dec. 31 Interest Expense 1,200
Interest Payable 1,200
Dec. 31 Salaries Expense 750
Salaries Payable 750
Dec. 31 Advertising Expense 135
Accounts Payable 135
12.
Homework Problem 4
Star Interior Designs

The transactions for Star Interior Designs for the year 2000 have been recorded in the accounting
system. This assignment requires you to prepare adjusting entries for December 2000.

Dec. 31 Performed services for a client for $1,250. The customer will be billed in
January.

Dec. 31 $10,000 was borrowed by signing a 12%, two year note on October 1, 2000.
Record the interest on the note.

Dec. 31 Employee wages of $1,150 for December will be paid in January.

Dec. 31 Advertising costs of $115 for December will be paid in January.

DATE ACCOUNT DEBIT CREDIT

2000
Dec. 31 Accounts Receivable 1,250
Service Revenue 1,250
Dec. 31 Interest Expense 300
Interest Payable 300
Dec. 31 Salaries Expense 1,150
Salaries Payable 1,150
Dec. 31 Advertising Expense 115
Accounts Payable 115