chapter 5 practice activity Key
1.For each of the accounts listed below, enter the words, Increase or Decrease, in the Debit and Credit columns to indicate the effects of each on the account balance.
Learning Objective: 2
Level: Easy
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Section: 1
2.Read each of the following transactions for Patel's' Repair Services. Determine the accounts to be debited and credited in the necessary end-of-May adjustments.
(A) On May 1, 20--, Patel's Repair Services, a new firm, paid $6,600 rent in advance for a six-month period. The $6,600 was debited to the Prepaid Rent account.
(B) On May 1, 20--, the firm bought supplies for $2,000. The $2,000 was debited to the Supplies account. An inventory of supplies at the end of June showed that items costing $800 were on hand.
(C) On May 1, 20--, the firm bought equipment costing $10,000. The equipment has an expected useful life of 10 years and no salvage value. The firm will use the straight-line method of depreciation.
(A) Rent Expense; Prepaid Rent
(B) Supplies Expense; Supplies
(C) Depreciation Expense; Accumulated Depreciation
Learning Objective: 2
Level: Easy
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Section: 1
3.Read the description of following adjustments that are required at the end of the accounting period for AAA Appliance Repair Services. Record the necessary adjusting entries on page 2 of a general journal. Omit the descriptions.
(A) Prepaid rent for the year on January 1, 20--. Rent expired during the month of January 20--, $2,000.
(B) Purchased supplies for $7,600 on January 1, 20--. Inventory of supplies was $1,600 on January 30, 20--.
(C) Depreciation is computed using the straight-line method. Equipment purchased on January 1, 20--, for $15,000 has an estimated useful life of 5 years with no salvage value. (D) Signed a 3-month contract for $600 prepaid advertising on January 1, 20--.
Learning Objective: 2
Level: Medium
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Section: 1
4.The balances of the ledger accounts for Oleman Services on January 31, 20--, and the information needed for adjustments are shown below. Prepare the Trial Balance section, record the adjustments, and complete the worksheet.
Adjustment information:
(a) The supplies were purchased on January 1, 20--. Inventory of supplies of $600 on January 31, 20--.
(b) The amount of Prepaid Insurance represents a payment made January 1, 20--, for a six-month insurance policy.
(c) The equipment, purchased January 1, 20--, has an estimated useful life of 5 years with no salvage value. The firm uses the straight-line method of depreciation.
Learning Objective: 1
Learning Objective: 2
Learning Objective: 3
Level: Hard
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Section: 1,2
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LearningObjective:2 / 4
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Level:Easy / 2
Level:Hard / 1
Level:Medium / 1
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