Reference no: EM133117144
Questions -
Q1. On September 31st, 2021, MNO Restaurant paid $6,000 in advance for a one year insurance policy effective October 1st, 2021. What is the adjusting entry required on October 31st, 2021?
a. Debit Insurance expense $500; Credit Insurance payable $500
b. Debit Insurance expense $1,500; Credit Prepaid insurance $1,500
c. Debit Insurance expense $500; Credit Prepaid insurance $500
d. Debit Insurance expense $6,000; Credit Prepaid insurance $6,000
Q2. True or False: The total of the debits and credits in the adjustments column on the worksheet must always balance.
Q3. On January 1st, 2021, your business paid $3,000 in advance for a year of rent. On August 1st, 2021, which of the following is true?
a. Prepaid rent = $250; Rent Expense = $1,250
b. Prepaid rent = $1,250; Rent Expense = $1,750
c. Prepaid rent = $3,000; Rent Expense = $0
d. Prepaid rent = $1,750; Rent Expense = $1,250
Q4. HIJ Hotel purchases a computer system for $32,000 on January 1st, 2021. The system is estimated to have a useful life of 15 years, at which point it will have a residual value of $2,000. HIJ uses the straight-line method to account for depreciation. What is the accumulated depreciation and book value respectively in 8 years?
a. Accumulated depreciation: $15,000; book value: $17,000.
b. Accumulated depreciation: $14,000; book value: $18,000.
c. Accumulated depreciation: $18,000; book value: $12,000.
d. Accumulated depreciation: $16,000; book value: $16,000.
Q5. On January 1st, ABC Catering entered into a six-month, $30,000 contract to provide meals for a remote construction site. How much revenue will ABC Co. have recognized by April 30th?
a. $5,000
b. $30,000
c. $15,000
d. $20,000
Q6. On July 1st, 2021, BBB Catering took out a five-year, $30,000 loan from the bank. The loan has an interest rate of 5% annually. Interest is paid each year on the date the loan was issued. What adjusting entry is necessary on December 31st, 2021, which is the fiscal year end date?
a. No entry is required
b. Decrease Bank Loan payable $1,500; Increase Interest expense $1,500Debit Bank Loan $3,000; Credit Interest expense $3,000
c. Increase Interest payable $750; Increase Interest expense $750
d. Increase Interest payable $1,500; Increase Interest expense $1,500
Q7. On January 1st, ABC Catering entered into a six-month, $30,000 contract to provide meals to XYZ Co. How much unearned revenue will ABC report on March 30th?
a. $20,000
b. $30,000
c. $15,000
d. $5,000