Define the Following in Your Own Words

Leader: Session 11 Handout: 9/30/14 Course: Supplemental Instruction Instructor: Iowa State University Date:

Define the following in your own words: 1. Adjustments______

2. Adjusting Journal Entries______

3. Carrying value______

4. Depreciation______

5. Contra-account______

6. Adjusted trial balance______

7. Temporary accounts______

8. Permanent accounts______

9. Post-closing trial balance______

10. Which of the following accounts would not appear in a closing journal entry?

a. Interest revenue

b. Accumulated depreciation

c. Retained earnings

d. Salary expense

11. On December 31, an adjustment is made to reduce unearned revenue and report (earned) revenue. How many accounts will be included in this adjusting journal entry

a. None

b. One

c. Two

d. Three

12. When a concert promotions company collects cash for ticket sales two months in advance of the show date, which of the following accounts is recorded?

a. Accrued liability

b. Accounts receivable

1060 Hixson-Lied Student Success Center v 515-294-6624 v [email protected] v http://www.si.iastate.edu c. Prepaid expense

d. Unearned revenue

13. Assume a company receives a bill for $10000 for advertising done during the current year. If this bill is not yet recorded at the end of the year, what will the adjusting journal entry include?

a. Debit to advertising expense of $10000

b. Credit to advertising expense of $10000

c. Debit to accrued liabilities of $10000

d. Need more information to determine

14. Which account is least likely to appear in an adjusting journal entry?

a. Cash

b. Interest receivable

c. Income tax expense

d. Salaries payable

Use the following information for questions 4-6 Advanced Cleaning had the following unadjusted trial balance at the end of its second year of operations ending December 31, 2010. Amounts are given in thousands of dollars.

Account Titles Debits Credits

Cash $38

Accounts Receivable 9

Prepaid Insurance 6

Machinery 80

Accumulated Depreciation $ 0

Accounts Payable 9

Contributed Capital 76

Retained Earnings 4

Sales Revenue 80

Administrative Expenses 26

Wages 10 ____

Totals $169 $169

Other information: -insurance expired during 2010, $5

-depreciation expense for 2010, $4

-wages payable, $7

-income tax expense, $9

1. Prepare the adjusting journal entries for 2010

2. Using T-accounts, determine the adjusted balances in each account and prepare an adjusted trial balance as of December 31, 2010. 3. Using the adjusted balances prepare an income statement, statement of retained earnings, and balance sheet for 2010.

4. Using the adjusted balances give the closing journal entry for 2010.