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Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition by Donald E. Kieso, Paul D. Kimmel, Jerry J. Weygandt

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EXERCISE 3-7

Purpose: (L.O. 5, 6, 7) This exercise will test your ability to detect adjusting entries by comparing an adjusted trial balance with an unadjusted trial balance.

The trial balance and the subsequent adjusted trial balance at December 31, 2014, for the Bradley Company appear below. The accounting period coincides with the calendar year.

BRADLEY COMPANY

Trial Balance

December 31, 2014

images

Instructions

  1. Journalize the adjusting entries recorded on December 31, 2014.
  2. Answer the following questions:
    1. How many months was the note receivable outstanding during 2014?
    2. If the rent is a constant amount each month, how many months rent is prepaid as of December 31, 2014?
    3. How much is the monthly license fee assuming the monthly amount has remained unchanged during the whole year?
    4. If the depreciation is a constant amount each year, for how many years has the office equipment been in use?
    5. Assuming the balance of Salaries and Wages Payable at January 1, 2014 was $0, how much cash was paid to employees during 2014?

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