Question 1

A company purchases a one-year insurance policy for $4,150 on July 1, 2025, covering July 2025 through June 2026. What is the adjusting entry for insurance expense on December 31, 2025?

Accepted Answer

Debit Insurance Expense $2,075; Credit Prepaid Insurance $2,075

Question 2

A company has the following balances at year-end: Sales Revenue $300,000, Sales Returns & Allowances $40,000, and Sales Discounts $9,600. What is the amount of net sales reported on the income statement?

Accepted Answer

$250,400

Question 3

Given the following trial balance information: Equipment $277,800, Accumulated Depreciation $72,650, what is the net book value of equipment reported on the balance sheet?

Accepted Answer

$205,150

Question 4

A company estimates $8,150 in depreciation expense each year. What is the adjusting entry at year-end?

Accepted Answer

Debit Depreciation Expense $8,150; Credit Accumulated Depreciation $8,150

Question 5

A company’s bank statement shows an ending balance of $29,279. There is a deposit in transit of $1,675 and outstanding checks totaling $2,974. What is the adjusted bank balance?

Accepted Answer

$27,980

Question 6

If a company’s net sales are $850,000 and its gross profit percentage is 20%, what is the cost of goods sold?

Accepted Answer

$680,000

Question 7

A company uses a perpetual inventory system. It sells $3,500 of blue jeans for cash. The customer later brings back $420 of blue jeans for a $140 allowance. What is the correct journal entry for the $140 allowance?

Accepted Answer

Debit Sales Returns and Allowances $140; Credit Cash $140

Question 8

A company’s adjusted trial balance shows Service Revenue $48,100, Rent Expense $17,800, Salaries and Wages Expense $3,000, and Supplies Expense $52,900. What is the company’s net income (loss)?

Accepted Answer

$-25,600

Question 9

A company’s unadjusted trial balance includes Supplies $138,600. At year-end, a count shows $85,700 of supplies remain. What is the adjusting entry for supplies?

Accepted Answer

Debit Supplies Expense $52,900; Credit Supplies $52,900

Question 10

A company receives $5,600 in advance for services to be performed. At year-end, all services have been performed. What is the adjusting entry?

Accepted Answer

Debit Deferred Revenue $5,600; Credit Service Revenue $5,600

Question 11

A company’s bank statement includes a $67 deduction for an NSF check and a $25 deduction for bank service charges. What is the correct journal entry to record these items?

Accepted Answer

Debit Bank Service Charges $25, Debit Accounts Receivable $67; Credit Cash $92

Question 12

A company established a petty cash fund of $1,000 on April 1. What is the correct journal entry?

Accepted Answer

Debit Petty Cash $1,000; Credit Cash $1,000

Question 13

A company’s adjusted trial balance shows: Cash $68,900, Accounts Receivable $118,300, Supplies $85,700, Prepaid Insurance $4,350, Equipment $277,800, Accumulated Depreciation $72,650. What is the total current assets?

Accepted Answer

$277,250

Question 14

A company’s closing entries include: Service Revenue $36,000, Salaries and Wages Expense $8,000, Rent Expense $4,000, Depreciation Expense $2,000, Income Tax Expense $2,000. What is the amount transferred to Income Summary?

Accepted Answer

$36,000 credit and $16,000 debit

Question 15

A company’s adjusted trial balance shows: Accounts Payable $104,100, Salaries and Wages Payable $21,600, Notes Payable (long-term) $87,400. What is the total liabilities reported on the balance sheet?

Accepted Answer

$213,100

Question 16

A company’s adjusted trial balance shows: Common Stock $216,100, Retained Earnings $143,500. What is the total stockholders’ equity?

Accepted Answer

$359,600

Question 17

A company’s adjusted trial balance shows: Service Revenue $48,100, Interest Revenue $22,160, Supplies Expense $52,900, Repairs and Maintenance Expense $26,400, Rent Expense $17,800, Depreciation Expense $8,150, Insurance Expense $4,350, Salaries and Wages Expense $3,000. What is the company’s income from operations?

Accepted Answer

$-42,340

Question 18

A company’s adjusted trial balance shows: Deferred Revenue $3,600. At year-end, $5,600 of services have been performed that were previously paid in advance. What is the adjusting entry?

Accepted Answer

Debit Deferred Revenue $5,600; Credit Service Revenue $5,600

Question 19

A company’s adjusted trial balance shows: Interest Receivable $1,560. At year-end, an additional $260 of interest has been earned but not yet received. What is the adjusting entry?

Accepted Answer

Debit Interest Receivable $260; Credit Interest Revenue $260

Question 20

A company’s adjusted trial balance shows: Rent Expense $17,800, Repairs and Maintenance Expense $26,400, Depreciation Expense $8,150, Insurance Expense $4,350, Salaries and Wages Expense $3,000. What is the total operating expenses?

Accepted Answer

$59,700

Financial Accounting Study Guide: Adjusting Entries, Trial Balances, Closing Entries, and Bank Reconciliation

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