Reference no: EM13789522

1. Which journal entry reflects the adjusting entry needed on December 31?

Last year, BOC purchased a building for $1,000,000. The expected life of the building is 20 years and its expected salvage value is $200,000. Now, it is December 31, the end of the fiscal year. No other entries were recorded for this building during the year.

No entry needed. The building was not purchased this year.

Dr. Depreciation Expense 50,000

Cr. Building                         50,000

Dr. Depreciation Expense 50,000

Cr. Accumulated Depreciation 50,000

Dr. Depreciation Expense 40,000

Cr. Building                         40,000

Dr. Depreciation Expense 40,000

Cr. Accumulated Depreciation 40,000

2. Which journal entry reflects the adjusting entry needed on December 31?:

In November, BOC received a $5,000 cash deposit from a customer for custom-build goods that will be delivered in January (BOC recorded an entry for this $5,000 in November). Now, it is December 31, the end of the fiscal year.

Dr. Unearned Revenue 5,000

Cr. Inventory 5,000

No entry needed.

Dr. Cash 5,000

Cr. Revenue 5,000

Dr. Advances from Customers 5,000

Cr. Revenue 5,000

Dr. Unearned Revenue 5,000

Cr. Revenue 5,000