LO 4.2Identify whether each of the following transactions, which are related to revenue recognition, are accrual, deferral, or neither.

1. provided legal services to client, who paid at the time of service
2. received cash for legal services performed last month
3. received cash from clients for future services to be provided
4. provided legal services to client, to be collected next month

LO 4.2Identify whether each of the following transactions, which are related to expense recognition, are accrual, deferral, or neither.

1. recorded employee salaries earned, to be paid in future month
2. paid employees for current month salaries
3. paid employee salaries for work performed in a prior month
4. gave an employee an advance on future wages

LO 4.2 and LO 4.3Indicate what impact the following adjustments have on the accounting equation, Assets = Liabilities + Equity (assume normal balances).

LO 4.2What two accounts are affected by the needed adjusting entries?

1. supplies actual counts are lower than account balance
2. employee salaries are due but not paid at year end
3. insurance premiums that were paid in advance have expired

LO 4.3Reviewing insurance policies revealed that a single policy was purchased on March 1, for one year’s coverage, in the amount of $9,000. There was no previous balance in the Prepaid Insurance account at that time. Based on the information provided,

1. Make the December 31 adjusting journal entry to bring the balances to correct.
2. Show the impact that these transactions had.

LO 4.3On September 1, a company received an advance rental payment of $12,000, to cover six months’ rent on an office building. There was no beginning balance in the Unearned Rent account for the period. Based on the information provided,

1. Make the December 31 adjusting journal entry to bring the balances to correct.
2. Show the impact that these transactions had.

LO 4.3Reviewing payroll records indicates that one-fifth of employee salaries that are due to be paid on the first payday in January, totaling $15,000, are actually for hours worked in December. There was no previous balance in the Salaries Payable account at that time. Based on the information provided, make the December 31 adjusting journal entry to bring the balances to correct.

LO 4.3On July 1, a client paid an advance payment (retainer) of $10,000, to cover future legal services. During the period, the company completed $6,200 of the agreed-on services for the client. There was no beginning balance in the Unearned Revenue account for the period. Based on the information provided, make the journal entries needed to bring the balances to correct for:

1. original transaction
2. December 31 adjustment

LO 4.3Prepare journal entries to record the business transaction and related adjusting entry for the following:

1. March 1, paid cash for one year premium on insurance contract, $18,000
2. December 31, remaining unexpired balance of insurance, $3,000

LO 4.3Prepare journal entries to record the following adjustments:

1. revenue earned but not collected, nor recorded, $14,000
2. revenue earned that had originally been collected in advance, $8,500
3. taxes due but not yet paid, $ 2,750

LO 4.3Prepare adjusting journal entries, as needed, considering the account balances excerpted from the unadjusted trial balance and the adjustment data.

1. amount due for employee salaries, $4,800
2. actual count of supplies inventory, $ 2,300
3. depreciation on equipment, $3,000

LO 4.4Prepare an adjusted trial balance from the following adjusted account balances (assume accounts have normal balances).

LO 4.4Prepare an adjusted trial balance from the following account information, considering the adjustment data provided (assume accounts have normal balances).

Adjustments needed:

• Physical count of supplies inventory remaining at end of period, $2,150
• Taxes payable at end of period, $3,850

LO 4.5From the following Company B adjusted trial balance, prepare simple financial statements, as follows:

1. Income Statement
2. Retained Earnings Statement
3. Balance Sheet