Reference no: EM132477329
Gemmex Inc. is a consulting company that specializes in systems design and implementation. The following transactions are recorded by Gemmex during July, its first month of operations.
July 1: Issued common shares in exchange for $50,000 in cash.
July 1: Paid $2,400 representing the rent for the months of July, August, and September.
July 1: Signed a three-year note for $50,000 at the bank. The note bears an annual interest rate of 12%, and both the note and its accrued interest are due at the end of three years.
July 1: Purchased a packaged set of computer systems for $18,000 to be used in future consulting jobs. The package has a useful life of three years and no residual value.
July 15: Received $8,000 cash from a customer for services to be performed over the next two months.
July 20: Paid employees $7,500 for the first half of July. A payment of the same amount but for the second half will be made on August 5.
July 31: Billed customers $17,500 for the work performed during July.
July 31: Received a utility bill for $300. The amount is due in 30 days.
Gemmex follows an accrual accounting system. It has an effective rate of 40% for income tax which is accrued monthly but paid annually at the end of year.
Problem 1: The July 1 journal entry to record the payment of $2,400 will include a:
Question options:
A) Debit to Prepaid Rent of $2,400
B) Debit to Prepaid Rent of $800
C) Debit to Cash of $2,400
D) Debit to Rent Expense of $2,400
E) Debit to Rent Expense of $800
Problem 2: The July 1 journal entry to record the signing of the three-year note will include a:
Question options:
A) Credit of $6,000 to Interest Payable
B) Credit to Cash of $50,000
C) Debit to Bank Loan of $50,000
D) Credit of $50,000 to Note payable
E) Debit to Interest Expense of $6,000
Problem 3: The July 1 journal entry to record the purchase of computer systems will include a:
Question options:
A) Debit of $18,000 to Computers
B) Debit to Cash of $18,000
C) Debit of $6,000 to Computers
D) Debit of $6,000 to Computer Expense
E) Debit of $18,000 to Computer Expense
Problem 4: The July 15 journal entry to record the receipt of cash from the customer will include a:
Question options:
A) Debit of $8,000 to Service revenue
B) Credit to Cash of $8,000
C) Credit of $8,000 to Unearned revenue
D) Credit of $8,000 to Service revenue
E) Debit of $8,000 to Unearned revenue
Problem 5: The July 20 journal entry to record the payment to employees will include a:
Question options:
A) Debit of $7,500 to Employee expense
B) Credit of $15,000 to Employee expense
C) Credit of $7,500 to Employee expense
D) Debit of $15,000 to Employee expense
E) Debit to Cash of $7,500
Problem 6: The adjusting entries on July 31 will include a:
Question options:
A) Credit of $15,000 to Employee expense
B) Credit of $7,500 to Employee expense
C) Debit of $7,500 to Employee expense
D) Debit to Cash of $7,500
E) Debit of $15,000 to Employee expense
Problem 7: The adjusting entries on July 31 will include a:
Question options:
A) Debit of $600 to Depreciation expense
B) Debit of $6,000 to Accumulated depreciation
C) Debit of $1000 to Accumulated depreciation
D) Debit of $500 to Depreciation expense
E) Debit of $6,000 to Depreciation expense
Problem 1: The adjusting entries on July 31 will include a:
Question options:
A) Debit of $1,600 to Prepaid rent
B) Debit of $1,600 to Prepaid rent
C) Debit of $800 to Rent expense
D) Debit of $2,400 to Rent expense
E) Debit of $800 to Prepaid rent
Problem 1: The adjusting entries on July 31 will include a:
Question options:
A) Credit of $6,000 to Service revenue
B) Credit of $4,000 to Service revenue
C) Debit of $2,000 to Unearned revenue
D) Debit of $4,000 to Unearned revenue
E) Debit of $2,000 to Service revenue
Problem 10: The adjusting entries on July 31 will include a:
Question options:
A) Debit of $500 to Interest expense
B) Debit of $6,000 to Interest expense
C) Credit of $500 to Interest expense
D) Debit of $6,000 to Interest payable
E) Credit of $6,000 to Interest payable