SOLUTIONS ARE INCLUDED IN THE
END OF THE DOCUMENT.
Question 1:
Ivanhoe Quest Games adjusts its accounts annually. Assume that any prepaid expenses are
initially recorded in asset accounts. Assume that any revenue collected in advance is initially
recorded as liabilities. The following information is available for the year ended December 31,
2024:
1. A $3,840 one-year insurance policy was purchased on April 1, 2024.
2. Paid $5,700 on August 31, 2024, for ve months' rent in advance.
3. On September 27, 2024, received $3,700 cash from a corporation that sponsors games for
the most improved students attending a nearby school. The $3,700 was for 10 games,
worth $370 each, that are played on the rst Friday of each month starting in October.
(Use the Unearned Revenue for the initial entry and Service Revenue for the adjusting
entry.)
4. Signed a contract for cleaning services starting December 1, 2024, for $540 per month.
Paid for the rst three months on November 30, 2024. (Use Prepaid Expenses for the
initial entry and Of ce Expense for the adjusting entry.)
5. On December 15, 2024, sold $970 of gift certi cates to a local gaming club. On
December 31, 2024, determined that $480 of these gift certi cates had not yet been
redeemed. (Use the account Unearned Revenue.)
For each transaction, prepare the adjusting entry required on December 31, 2024.
Question 2:
Patricia Williams started her own accounting rm, Williams Accounting, on June 1, 2024.
Patricia wants to prepare monthly nancial statements, so adjusting entries are required on June
30. Selected transactions for June follow:
1. $760 of supplies were used during the month.
2. Utilities expense incurred but not yet recorded or paid on June 30, 2024, is $227.
3. Paid cash of $3,336 for a one-year insurance policy on June 1, 2024. The policy came
into effect on this date.
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, 4. On June 1, purchased of ce equipment for $9,240 cash. It is being depreciated at $154
per month for 60 months.
5. On June 1, Patricia signed a note payable for $7,800, 6% interest.
6. Assume June 30 is a Wednesday and employees are paid on Fridays. Williams
Accounting has two employees, who are paid $1,010 each for a ve-day workweek that
ends on Friday.
7. On June 15, received a $1,200 advance cash payment from a client for accounting
services expected to be provided in the future. As at June 30, one-half of these services
had not been performed.
8. Invoices representing $1,700 of services performed during the month of June have not
been recorded as at June 30.
Part a) Prepare adjusting entries for the items above.
Question 3:
The ledger of Sandhill Rental Agency on March 31, 2024, includes the following selected
accounts before preparing quarterly adjusting entries:
Debit Credit
Supplies $15,000
Prepaid insurance 3,600
Equipment 39,840
Accumulated depreciation—
$9,960
equipment
Unearned revenue 9,200
Notes payable 24,000
Rent revenue 32,400
Salaries expense 15,000
An analysis of the accounts shows the following:
1. The equipment has a four-year useful life.
2. One-quarter of the unearned rent is still unearned on March 31, 2024.
3. The note payable has an interest rate of 8%. Interest is paid every June 30 and December
31.
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END OF THE DOCUMENT.
Question 1:
Ivanhoe Quest Games adjusts its accounts annually. Assume that any prepaid expenses are
initially recorded in asset accounts. Assume that any revenue collected in advance is initially
recorded as liabilities. The following information is available for the year ended December 31,
2024:
1. A $3,840 one-year insurance policy was purchased on April 1, 2024.
2. Paid $5,700 on August 31, 2024, for ve months' rent in advance.
3. On September 27, 2024, received $3,700 cash from a corporation that sponsors games for
the most improved students attending a nearby school. The $3,700 was for 10 games,
worth $370 each, that are played on the rst Friday of each month starting in October.
(Use the Unearned Revenue for the initial entry and Service Revenue for the adjusting
entry.)
4. Signed a contract for cleaning services starting December 1, 2024, for $540 per month.
Paid for the rst three months on November 30, 2024. (Use Prepaid Expenses for the
initial entry and Of ce Expense for the adjusting entry.)
5. On December 15, 2024, sold $970 of gift certi cates to a local gaming club. On
December 31, 2024, determined that $480 of these gift certi cates had not yet been
redeemed. (Use the account Unearned Revenue.)
For each transaction, prepare the adjusting entry required on December 31, 2024.
Question 2:
Patricia Williams started her own accounting rm, Williams Accounting, on June 1, 2024.
Patricia wants to prepare monthly nancial statements, so adjusting entries are required on June
30. Selected transactions for June follow:
1. $760 of supplies were used during the month.
2. Utilities expense incurred but not yet recorded or paid on June 30, 2024, is $227.
3. Paid cash of $3,336 for a one-year insurance policy on June 1, 2024. The policy came
into effect on this date.
fi fi fi fi fi fifi fi
, 4. On June 1, purchased of ce equipment for $9,240 cash. It is being depreciated at $154
per month for 60 months.
5. On June 1, Patricia signed a note payable for $7,800, 6% interest.
6. Assume June 30 is a Wednesday and employees are paid on Fridays. Williams
Accounting has two employees, who are paid $1,010 each for a ve-day workweek that
ends on Friday.
7. On June 15, received a $1,200 advance cash payment from a client for accounting
services expected to be provided in the future. As at June 30, one-half of these services
had not been performed.
8. Invoices representing $1,700 of services performed during the month of June have not
been recorded as at June 30.
Part a) Prepare adjusting entries for the items above.
Question 3:
The ledger of Sandhill Rental Agency on March 31, 2024, includes the following selected
accounts before preparing quarterly adjusting entries:
Debit Credit
Supplies $15,000
Prepaid insurance 3,600
Equipment 39,840
Accumulated depreciation—
$9,960
equipment
Unearned revenue 9,200
Notes payable 24,000
Rent revenue 32,400
Salaries expense 15,000
An analysis of the accounts shows the following:
1. The equipment has a four-year useful life.
2. One-quarter of the unearned rent is still unearned on March 31, 2024.
3. The note payable has an interest rate of 8%. Interest is paid every June 30 and December
31.
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