Expert Answers

  1. A firm purchases machinery, which has an estimated useful life of 10 years and no salvage value, for $30,000 at the beginning of the accounting period. What is the adjusting entry for depreciation at the end of one month if the firm uses the straight-line method of depreciation?
  2. What adjustment would be recorded for expired insurance?
  3. What are prepaid expenses? Give 4 examples.
  4. Why is it necessary to make an adjustment for supplies used?
  5. Are the following assets depreciated? (why or why not) (a)Prepaid insurance(b)Delivery truck (c)Land (d)Manufacturing Equipment (e)Prepaid Rent (,f)Furniture (g)Store Equipment, (h)Prepaid Advertising (i)Computers
  6. What effect does each of the following items have on net income? (a) the owner withdrew cash from the business . (b) Credit customers paid $1000 on outstanding balances that were past due. (c) the business bought equipment on account that cost $10,000. (d) The business journalizes and post adjustment entries?
  7. What effect does each item in question 6 have on owner’s equity?
  8. Why is it necessary to journalize and post adjusting entries?
  9. What three amounts are reported on the balance sheet for a long-term asset such as equipment?
  10. How does a contra asset account differ from a regular asset account?
  11. What is book value?
  12. Why is an accumulated depreciation account used in making the adjustment for depreciation?
  13. How does the straight-line method of depreciation work?
  14. Give 3 examples of assets that are subject to depreciation.