Reference no: EM132545913

Questions -

Q1) These are the information related with the monthly salary expenses of a company: Salary before taxes is $30,000; Employee income taxes is $5,000; Employee social security taxes is $6,000. The employees receive the net salary in 30 days. The income taxes and social security taxes will be paid to the related government agencies in due course.

After recording the journal entry related with above salary, how much do liabilities increase?

Q2) A company started the year with $400 of supplies. During the year, the company purchased an additional $1,200 of supplies. There were $700 of supplies on hand at the end of the year. An adjusting entry prepared at the end of the accounting period would include a:

a. debit to Supplies for $700

b. debit to Supplies for $600

c. debit to Supplies for $900

d. debit to Supplies for $800

Q3) On April 1, Year 1, a Bookstore bought an insurance policy costing $48,000 that would insure the retail building for two years against fire loss. What asset account and what amount are recorded on the balance sheet at December 31, Year 1?

a. Insurance Expense, $30,000

b. Prepaid Insurance, $30,000

c. Insurance Expense, $18,000

d. Prepaid Insurance, $18,000