Adjusting the Accounts

Answer

Under the Cash Basis statements, companies record revenue when they receive cash. They record an expense when they pay out cash. The cash basis seems appealing due to its simplicity, but it often produces misleading financial statements. It fails to record revenues when companies performed services but not received cash. For this reason expenses does not match with revenues.

Under the Accrual basis financial statements, companies record transactions that change a company's financial statements in the periods in which the events occur. It determines net income that means companies recognize revenues when they performed the services(rather than when they receive cash) and the expenses(rather than when they pay cash) for a particular period. So that accrual basis financial statements provide more usual information than cash-basis statements

Problems: Adjusting the Accounts

Problem-1: Adjusting the Accounts

Logan Krause started her own consulting firm, Krause Consulting, on May 1, 2019. The trial balance at May 31 is as follows. Krause ConsultingTrial BalanceMay 31, 2019 In addition to...

Problem-2: Adjusting the Accounts

Mac's Motel opened for business on May 1, 2019. Its trial balance before adjustment on May 31 is as follows. MAC'S MOTELTrial BalanceMay 31, 2019 In addition to those accounts...

Problem-3: Adjusting the Accounts

Alena Co. was organized on July 1, 2019. quarterly financial statements are prepared. The unadjusted and adjusted trial balances as of September 30 are shown bellow ALENA CO.Trial BalanceSeptember 30,...

Problem-4: Adjusting the Accounts

A review of the ledger of Remina Company at December 31, 2019, produces the following data pertaining to the preparation of annual adjusting entries. Prepaid Insurance $10,440. The company has...

Problem-5: Adjusting the Accounts

On Nobember 1, 2019, the account balances of Hamm Equipment Repair were as follows During November, the following summary transactions were completed. Nov. 8Paid $1,700 for salaries due employees of...

Problem-6: Adjusting the Accounts

Johnson Graphics Company was organized on January 1, 2019, by Cameron Johnson. At the end of the first 6 months of operations, the trial balance contained the accounts shown as...

Problem-7: Adjusting the Accounts

Hong Corporation encounters the following situations: Hong collects $1,300 from a customer in 2019 for services to be performed in 2020. Hong incurs utility expense which is not yet paid...

Problem-8: Adjusting the Accounts

Devin Wolf Company has the following balances in selected accounts on December 31, 2019 All the accounts have normal balances. The information below has been gathered at December 31, 2019....

Problem-9: Adjusting the Accounts

Zaragoza Company accumulates the following adjustment data at December 31, 2019

Problem-10: Adjusting the Accounts

The ledger of Passehl Rental Agency on March 31 of the current year includes the selected accounts, shown below, before adjusting entries have been prepared An analysis of the accounts...

Problem-11: Adjusting the Accounts

Meghan Lindh, D.D.S., opened a dental practice on January 1, 2019. During the first moth of operations, the following transactions occurred.

Problem-12: Adjusting the Accounts

The trial balance for Pioneer Advertising is shown in below

Problem-13: Adjusting the Accounts

The income statement of Montee Co for the month of July shows net income of $1,400 based on Service Revenue $5,500, Salaries and Wages Expense $2,300, Supplies Expens $1,200, and...

Problem-14: Adjusting the Accounts

A partial adjusted trial balance of Frangesch Company at January 31, 2019, shown as following. Frangesch CompanyAdjusted Trial BalanceJanuary 31, 2019 Instructions Answer the following questions, assuming the year begins...

Problem-15: Adjusting the Accounts

Selected accounts of Holly Company are shown as follows.

Problem-16: Adjusting the Accounts

The trial balances before and after adjustment for Turnquist Company at the end of its fiscal year are presented below.

Problem-17: Adjusting the Accounts

At Sekon Company prepayments are debited to expense when paid, and unearned revenues are credited to revenue when cash is received. During January of the current year, the following transactions...

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