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Segment Brands leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $800. Segment Brands collected the entire $6,400 cash on October 1 and recorded it as unearned revenue. Assuming adjusting entries are only made at year-end, the adjusting entry made by Segment Brands on December 31 would be:

Adjustments are necessary to bring an asset or liability account to its proper amount and also update a related expense or revenue account.

On September 1, Johnson Company loaned $100,000, at 12% annual interest, to a customer. Interest and principal will be collected when the loan matures one year from the issue date. Assuming adjustments are only made at year-end, what is the adjusting entry for accruing interest that Johnson would need to make on December 31, the calendar year-end?

On April 1, Albequerque, Inc. paid Penthouse Publishing Company $1,548 for 36-month subscriptions to several different magazines. Albequerque debited the prepayment to a Prepaid Subscriptions account, and the subscriptions started immediately. What adjusting entry should be made by Albequerque, Inc. for the adjustment on December 31 of the first year assuming the company is using a calendar-year reporting period and no previous adjustments had been made?

At the beginning of the year, Omega Company’s balance sheet reported Total Assets of $195,000; Total Liabilities of $15,000; and Total Paid-in capital of $60,000. During the year, the company reported total revenues of $226,000 and expenses of $175,000. Also, dividends during the year totaled $48,000. Assuming no other changes to Retained earnings, the balance in the Retained earnings account at the end of the year would be:

It is obvious that an error occurred in the preparation and/or posting of closing entries if:

On April 1, Taos, Inc. paid Penthouse Publishing Company $1,548 for 36-month subscriptions to several different magazines. Taos debited the prepayment to a Prepaid Subscriptions account, and the subscriptions started immediately. What amount should appear in the Prepaid Subscription account for Taos, Inc. after adjustments on December 31 of the second year assuming the company is using a calendar-year reporting period and the previous year adjustment had been made?

The question of when revenue should be recognized on the income statement according to GAAP is addressed by the:

If Rollings Services’ office supplies account balance on March 1 was $1,400, the company purchased $675 of supplies during the month, and a physical count of supplies on hand at the end of March indicated $1,250 unused, what is the amount of the adjusting entry for office supplies on March 31?

During August, Bulldozers R Us sells $356,000 in merchandise that has a one year warranty. Experience shows that warranty expenses average about 5% of the selling price. The warranty liability account has a credit balance of $12,800 before adjustment. Customers returned merchandise for warranty repairs during the month that used $9,400 in parts for repairs. The entry to record the estimated warranty expense for the month is: