Adjusted Trial Balance

Question 1

Define

Adjusted trial balance

Adjusting the Accounts

Answer 1

Is the primary basis for the preparation of financial statements because the accounts now contain all data needed for financial statements.

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Question 2

Purpose

Adjusted trial balance

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Answer 2

The purpose of an adjusted trial balance is to prove the equality of the total debit balances and the total credit balances in the ledger after all adjustments.
It shows the balances of all accounts, including those adjusted, at the end of the accounting period.

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Question 3

Determine the net income for the quarter April 1 to June 30

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Answer 3

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Question 4

Determine the total assets and total liabilities at June 30, 2022

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Answer 4

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Question 5

Determine the amount of owner’s capital at June 30, 2022

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Answer 5

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Question 6

Fill in the blank

___ become expired costs either through the passage of time (e.g. insurance) or through consumption (e.g., advertising supplies)

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Answer 6

prepaid expenses

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Question 7

make the adjustment

If at the time of purchase the company expects to consume the supplies before the next financial statement date, …

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Answer 7

It may choose to debit (increase) an expense account rather than an asset account.

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Question 8

Concept

Is the primary basis for the preparation of financial statements because the accounts now contain all data needed fro financial statements.

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Answer 8

Adjusted Trial Balance

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Question 9

Concept

It shows the balances of all accounts, including those adjusted, at the end of the accounting period.

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Answer 9

Adjusted Trial Balance

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Question 10

When?

Unearned revenues are recognized as revenue …

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Answer 10

at the time services are performed

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Question 11

Fill in the blank

Company may ___ ( ) a revenue account when they receive cash for future services.

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Answer 11

credit (increase)

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Question 12

Explain why each account may need adjustment

Supplies

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Answer 12

to recognize supplies used during the period.

Question 13

Explain why each account may need adjustment

Unearned Service Revenue

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Answer 13

to record revenue generated for services performed

Question 14

Explain why each account may need adjustment

Salaries and Wages Payable

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Answer 14

to recognize salaries and wages accrued to employees at the end of a reporting period

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Question 15

Prepare the following accrued adjusting entries at December 31

1. Services performed but not recorded are $4,200.
2. Utility expenses incurred but not paid are $660.
3. Salaries and wages earned by employees of $3,000 are unpaid.

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Answer 15

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Question 16

Enumerate the type of adjustment and related account

Accounts Receivable

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Answer 16

Type of Adjustment: Accrued Revenue
Related Account: Service Revenue

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Question 17

Enumerate the type of adjustment and related account

Supplies

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Answer 17

Type of Adjustment: Prepaid Expense
Related Account: Supplies Expense

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Question 18

Enumerate the type of adjustment and related account

Prepaid Insurance

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Answer 18

Type of Adjustment: Prepaid Expense
Related Account: Insurance Expense

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Question 19

Enumerate the type of adjustment and related account

Interest Payable

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Answer 19

Type of Adjustment: Accrued Expense
Related Account: Interest Expense

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Question 20

Enumerate the type of adjustment and related account

Unearned Service Revenue

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Answer 20

Type of Adjustment: Unearned Revenue
Related Account: Service Revenue

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Question 21

Prepare a correct income statement for July 2022

The income statement of Venden Co. for the month of July Prepare correct income statement. shows net income of $4,000 based on Service Revenue $8,700, Salaries and Wages Expense $2,500,
Supplies Expense $1,700, and Utilities Expense $500. In reviewing the statement, you discover the following.

1. Insurance expired during July of $700 was omitted.
2. Supplies expense includes $250 of supplies that are still on hand at July 31. 3.
3. Depreciation on equipment of $300 was omitted.
4. Accrued but unpaid wages at July 31 of $400 were not included.
5. Services performed but unrecorded totaled $650.

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Answer 21

Revenues:
* Service revenue ($8,700+$650)
Expenses:
Salaries and wages expense ($2,500+$400)
Supplies expenses ($1,700-$250)
Utilities expense $500
Insurance expense $700
Depreciation expense $300

Net income: $9,350-$5,850 = $3,500

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