Based on the following information relating to Matt’s Constructions, identify (in words) what adjustment is required at 30 June, the end of the accounting period. The first one has been answered to provide an example. (a) Matt paid $12,000 on 1 May 2024, for a 12-month insurance policy, recording it as Prepaid Insurance. Two months of the insurance policy have been incurred, so $2,000 needs to come out of the Prepaid Insurance (asset) account and into Insurance Expense to show that some of the expense that was prepaid is no longer an asset. (b) Matt employs a casual labourer when the business is particularly busy. The labourer worked in the last week of June 2024 and is owed $1,800. This has not been recorded. (c) Matt has supplies of nails and screws for construction jobs. The supplies account shows a balance of $300 but there is actually only $60 worth of nails and screws left on hand at 30 June. (d) Matt has tools and equipment that originally cost $10,000 two years ago. He is depreciating them using the straight-line method. They have an expected life of five years with no residual value. He has only recorded depreciation for the first year. (e) Matt constructed a shed for a customer in January 2024, and charged $900 on credit. The customer has now been declared bankrupt and Matt will not be able to collect the amount owing to him. Matt uses the allowance method. (f) Matt repaired a customer’s letterbox on his way home from work on 30 June 2024 for $150 on credit. He forgot to record it. (g) A customer who was going on holidays paid Matt $5,000 in advance for some renovation work on their home which Matt recorded as Unearned Income. By 30 June, 80% of the work had been performed.

An entity’s financial year ends on 30 June. On 1 May it pays a 12-month insurance premium of $24,000. Under the accrual system of accounting how much of the premium will be recognised as an expense for the current year ended 30 June and how much will be treated as an asset (prepaid insurance)?$20,000 expense and $4,000 prepaid insurance$6,000 expense and $18,000 prepaid insurance$12,000 expense and $12,000 prepaid insurance$4,000 expense and $20,000 prepaid insurance

An entity's financial year ends on 30 June 2015. On 1 April 2015 it pays a 12-month insurance premium of $16 000. Under the accrual system of accounting, how much of the premium will be recognised as an asset for the year ended 30 June 2015?

15.  Under the asset method of recording prepayment, the amount of adjustment as the end of the period represents the *a. used portion of the prepaid expenseb. unused portion of the prepaid expensec. earned portion of the prepaid expensed. the unearned portion of the prepaid expense

A prepayment is originally recorded as an asset. Later at the end of the accounting period, an adjustment is recorded causing in a(n) ______ in the asset account and a(n) ______ in the expense account.Multiple choice question.increase; increasedecrease; increaseincrease; decreasedecrease; decrease

Consider the following independent scenarios. For each, you need to identify three things: (i) the type of adjusting entry (either prepaid expense, prepaid income, accrued expense, accrued income, depreciation or doubtful debts) (ii) the accounts involved and the adjustment that is needed (increase/decrease) (iii) the effect on the Income Statement AND Balance Sheet of recording the adjustment. (a) A consulting firm had office supplies on hand at the start of May worth $450 recorded as an asset. During May they purchased another $250 worth of supplies. At the end of May, there were only $130 worth of supplies remaining. (b) A delivery business purchased a new truck on 1 April for $100,000. It was expected to last for five years with $20,000 residual value. Depreciation needs to be recorded at the end of June the same year. (c) A business receives its electricity account every three months, with the next one expected at the end of July. It needs to record electricity consumption for May and June, which is estimated at $400 per month. (d) A business has an investment of 1,000 shares of a publicly listed company. The dividend of $0.20 per share has just been announced at 30 June, but will not be paid for several weeks. (e) A gym received a $300 payment from a member on 1 June 2024 for three months membership, recording it as a liability. An adjustment is required at 30 June. (f) A business needs to increase its allowance for doubtful debts by $2,000. In addition, it has been notified that a customer who owes $250 will not pay.