A) After winning the TV show competitionStar Chef, Adriana started a cooking school, Adriana's Apron. Adriana's Apron prepares monthly financial statements. The following are the transactions for the month of September 2020.

1. On January 1, 2020, Adriana took out a bank loan for $76,800 with an interest rate of 5%. Interest is payable on the first day of each following month.
2. Students paid $38,100 in advance for cooking classes. At the end of the month, Adriana finished teaching $12,700 worth of cooking classes.
3. During the month, Adriana purchased supplies for her cooking classes such as meats and cheese for $9,750. At the end of the month, a physical count shows that $1,950 of supplies are left.
4. On September 1, Adriana purchased a refrigerator costing $4,080. This equipment will be used for 5 years and then donated to the food bank.
5. Adriana was hired to teach at a food festival. She taught the "Secrets to Italian Cooking" on September 30 and sent the festival organizers an invoice for $10,400. The invoice was paid in full on October 15, 2020.
6. Adriana will pay salaries of $5,320 for two weeks (14 days) on October 9, 2020. At the end of the month, nine days of salaries are unpaid and unrecorded.

Assume Adriana's Apron, uses Straight Line Method to depreciate the asset.

Required:

For transactions (a) to (f), help Adriana prepare the adjusting entries on September 30, 2020.

B) Rainmaker Environmental Consultants is just finishing its second year of operations. The company's unadjusted trial balance at October 31, 2020, follows:

RAINMAKER ENVIRONMENTAL CONSULTANTS

Unadjusted Trial Balance

October 31, 2020Acct.No.AccountDebitCredit101Cash$25,700106Accounts receivable62,000109Interest receivable0111Notes receivable51,000126Supplies5,000128Prepaid insurance2,890131Prepaid rent26,100161Office furniture75,000162Accumulated depreciation, office furniture$25,000201Accounts payable17,700210Wages payable0233Unearned consulting revenue25,400301Jeff Moore, capital215,820302Jeff Moore, withdrawals27,700401Consulting revenue233,020409Interest income450601Depreciation expense, office furniture0622Wages expense193,000637Insurance expense0640Rent expense42,500650Supplies expense6,500Totals$517,390$517,390

Rainmaker prepares adjustments each October 31. The following additional information is available on October 31, 2020.

1. It was determined that $11,700 of the unearned consulting revenue had not yet been earned.
2. It was discovered that $13,700 of the balance in the Consulting Revenue account was for services to be performed in November.
3. The balance in the Prepaid Rent account represents three months of rent beginning September 1, 2020.
4. Accrued wages at October 31 totalled $6,500.
5. The office furniture was purchased on March 1, 2019, and has an estimated useful life of two years. After two years of use, it is expected that the furniture will be worthless.
6. Accrued consulting revenue at year-end totalled $3,900.
7. Interest of $82 had accrued on the note receivable for the month of October.
8. The balance in the Prepaid Insurance account represents the remaining balance of a two-year policy purchased on April 1, 2019.
9. A count of the supplies on October 31 revealed a balance remaining of $590.

Assume Rainmaker Environmental uses the straight-line method to depreciate its assets.

Required:

Prepare the annual adjusting journal entries for October 31, 2020, based on the above.(If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

3- The main purpose of adjusting entries is to

Multiple Choice

• Record external transactions and events
• Record internal transactions and events
• Recognize revenues received during the period
• Recognize expenses paid during the period
• Adjust assets to their market value

4- A broad principle that requires identifying the activities of a business with specific time periods such as months, quarters, or years is the

Multiple Choice

• Operating cycle of a business
• Timeliness principle
• Going-concern principle
• Matching principle
• Accrual basis of accounting

5- The accounting principle that requires revenue to be reported when earned is the

Multiple Choice

• Matching principle
• Revenue recognition principle
• Timeliness principle
• Cost principle
• Going concern principle

6- The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the

Multiple Choice

• Revenue recognition principle
• Cost principle
• Cash basis of accounting
• Matching principle
• Timeliness principle

7- The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is

Multiple Choice

• Accrual basis accounting
• The operating cycle of a business
• Cash basis accounting
• The revenue recognition principle
• The matching principle

8- Adjusting entries

Multiple Choice

• Affect only income statement accounts
• Affect only balance sheet accounts
• Affect both income statement and balance sheet accounts
• Affect only statement of cash flows accounts
• Affect only equity accounts

9- The purpose of depreciation is to

Multiple Choice

• Measure the change in an asset's value
• Adjust the carrying value of an asset to market value
• Allocate the asset's cost to the periods benefiting from its use
• Recognize the reduced usefulness of an asset
• Adjust the ledger account balances for assets to equate to their current market value

10- Before recording adjusting entries, the Office Supplies account had a $359 debit balance while a physical count of the supplies showed $105 of unused supplies on hand. Thus, the required adjusting entry is

Multiple Choice

• Debit Office Supplies $105 and credit Office Supplies Expense $105
• Debit Office Supplies Expense $254 and credit Office Supplies $254
• Debit Office Supplies Expense $105 and credit Office Supplies $105
• Debit Office Supplies $254 and credit Office Supplies Expense $254
• Some other entry

11- An adjusting entry could be made for all the following except

Multiple Choice

• Prepaid expenses
• Depreciation expense
• Owner withdrawals
• Unearned revenues
• Accrued revenues

12- Which of the following assets is not depreciated?

Multiple Choice

• Store fixtures
• Computers
• Land
• Buildings
• Trucks