Problem 1: Due to an oversight, a company made no adjusting entry for accrued and unpaid employee wages of $24,000 on December 31. This oversight would:
a. Understate net income by $24,000.
b. Overstate net income by $24,000.
c. Have no effect on net income.
d. Overstate assets by $24,000.
e. Understate assets by $24,000.
Problem 2: If throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees, the end-of-period adjusting entry to record the portion of those fees that has been earned is:
a. Debit Cash and credit Legal Fees Earned.
b. Debit Cash and credit Unearned Legal Fees.
c. Debit Unearned Legal Fees and credit Legal Fees Earned.
d. Debit Legal Fees Earned and credit Unearned Legal Fees.
e. Debit Unearned Legal Fees and credit Accounts Receivable.
Problem 3: A company had no office supplies available at the beginning of the year. During the year, the company purchased $250 worth of office supplies. On December 31, $75 worth office supplies remained. How much should the company report as office supplies expense for the year?
a. $ 75.
b. $125.
c. $175.
d. $250.
e. $325.
Problem 4: On April 1, 2004 a company paid the $1,350 premium on a three-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the year ended December 31, 2004?
a. $1,350.
b. $450.
c. $1,012.50.
d. $337.50.
e. $37.50.
Problem 5: A Company pays each of its two office employees each Friday at the rate of $100 per day each for a five-day week that begins on Monday. If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the month-end adjusting entry to record the salaries earned but unpaid is:
a. Debit Unpaid Salaries $600 and credit Salaries Payable $600.
b. Debit Salaries Expense $400 and credit Salaries Payable $400.
c. Debit Salaries Expense $600 and credit Salaries Payable $600.
d. Debit Salaries Payable $400 and credit Salaries Expense $400.
e. Debit Salaries Expense $400 and credit Cash $400.
Problem 6: On January 1 a company purchase a five-year insurance policy for $1,800 with coverage starting immediately. If the purchase as recorded in the Prepaid Insurance account, and the company records adjustments only at year-end, the adjusting entry at the end of the first year is:
a. Debit Prepaid Insurance, $1,800; credit Cash, $1.800.
b. Debit Prepaid Insurance, $1,440; credit Insurance Expense, $1,440.
c. Debit Prepaid Insurance, $360; credit Insurance Expense, $360.
d. Debit Insurance Expense, $360; credit Prepaid Insurance, $360.
e. Debit Insurance Expense, $360; credit Prepaid Insurance, $1,440.
Problem 7: On May 1, 2004 Giltus Advertising Company received $1,500 from Julie Bee for advertising services to be completed April 30, 2005. The Cash receipt was recorded as unearned fees and at December 31, 2004, $500 of the fees had been earned. The adjusting entry on December 31 Year 1 should include:
a. A debit to Unearned Fees for $500.
b. A credit to Unearned Fees for $500.
c. A credit to Earned Fees for $1,000.
d. A debit to Earned Fees for $1,000.
e. A debit to Earned Fees for $500.
Problem 8: On April 30, 2004 a three-year insurance opolicy was purchased for $18,000 with coverage to begin immediately. What is the amount of insurance expense that would appear on the company's income statement for the year ended December 31, 2004?
a. $ 500.
b. $ 4,000.
c. $ 6,000.
d. $14,000.
e. $18,000.
Problem 9: ABC Co. leased a portion of its store to another company for eight months beginning on October 1, 2004 at a monthly rate of $800. This other company paid the entire $6,400 cash on October 1, which ABC Co. recorded as unearned revenue. The journal entry made by ABC Co. at year-end on December 31, 2004 would include:
a. A debit to Rent Earned for $2,400.
b. A credit to Unearned Rent for $2,400.
c. A debit to Cash for $6,400.
d. A credit to Rent Earned for $2,400.
e. A debit to Unearned Rent for $4,000.
Problem 10: A company recorded 2 days of accrued salaries of $1,400 for its employees on January 31. On February 9, it paid its employees for these accrued salaries and for other salaries earned through February 9. The January 31 and February 9 journal entries are:
a. 1/31 Salaries Expense 1,400 Salaries Payable 1,400 2/9 Salaries Payable 7,000 Salaries Expense 1,400 Cash 8,400
b. 1/31 Salaries Payable 1,400 Salaries Expense 1,400 2/9 Salaries Expense 5,600 Salaries Payable 1,400 Cash 7,000
c. 1/31 Salaries Expense 1,400 Cash 1,400 2/9 Salaries Expense 7,000 Cash 7,000
d. 1/31 Salaries Expense 1,400 Salaries Payable 1,400 2/9 Salaries Expense 7,000 Cash 7,000
e. 1/31 Salaries Expense 1,400 Salaries Payable 1,400 2/9 Salaries Expense 5,600 Salaries Payable 1,400 Cash 7,000
Problem 11: A company purchased a new truck at a cost of $42,000 on July 1, 2004. The truck is estimated to have a useful life of 6 years and a salvage value of $3,000. How much depreciation expense will be recorded for the truck for the year ended December 31, 2004?
a. $3,250.
b. $3,500.
c. $4,000.
d. $6,500.
e. $7,000.
Problem 12: An adjusting entry was made on December 31, 2004 to accrue salary expense of $1,200. Which of the following entries would be prepared to record the next payment of salaries, on January, 2005 in the amount of $3,000?
a. Salaries Expense 3,000 Cash 3,000
b. Salaries Payable 3,000 Cash 3,000
c. Salaries Payable 1,200 Cash 1,200
d. Salaries Expense 1,200 Salaries Payable 1,200
e. Salaries Payable 1,200 Salaries Expense 1,800 Cash 3,000
Problem 13: If a company records prepayment of expenses in an asset account, the adjusting entry would:
a. Result in a debit to an expense and a credit to an asset account.
b. Cause an adjustment to prior expense to be overstated and assets to be understated.
c. Cause an accrued liability account to exist.
d. Result in a debit to a liability and a credit to an asset account.
e. Decrease cash.
Problem 14: A company's Office Supplies account shows a beginning balance of $600 and an ending balance of $400. If office supplies expense for the year is $3,100, what amount of office supplies was purchased during the period?
a. $2,700.
b. $2,900.
c. $3,300.
d. $3,500.
e. $3,700.
Problem 15: On January 1, Denton Mabrey College received $1,200,000 in Unearned Tuition Revenue from its students for the spring semester, which spans four months beginning on January 2. What amount of tuition revenue should the college recognize on January 31?
a. $ 300,000
b. $ 600,000
c. $ 800,000
d. $ 900,000
e. $1,200,000
Problem 16: The Unadjusted Trial Balance columns of a company's work sheet show the balance in the Office Supplies account as $750. The Adjustments columns show that $425 of these supplies were used during the period. The amount shown as Office Supplies in the Balance
The Unadjusted Trial Balance columns of a company's work sheet show the balance in the Office Supplies account as $750. The Adjustments columns show that $425 of these supplies were used during the period. The amount shown as Office Supplies in the Balance Sheet columns of the work sheet is:
a. $325 debit.
b. $325 credit.
c. $425 debit.
d. $750 debit.
e. $750 credit.
Problem 17: Accumulated Depreciation, Accounts Receivable, and Service Fees Earned would be sorted to which respective columns in completing a work sheet?
Accumulated Depreciation, Accounts Receivable, and Service Fees Earned would be sorted to which respective columns in completing a work sheet?
a. Balance Sheet or Statement of Owner's Equity-Credit; Balance Sheet or Statement of Owner's Equity Debit; and Income Statement-Credit.
b. Balance Sheet or Statement of Owner's Equity-Debit; Balance Sheet or Statement of Owner's Equity-Credit; and Income Statement-Credit.
c. Income Statement-Debit; Balance Sheet or Statement of Owner's Equity-Debit; and Income Statement-Credit.
d. Income Statement-Debit; Income Statement-Debit; and Balance Sheet or Statement of Owner's Equity-Credit.
e. Balance Sheet or Statement of Owner's Equity-Credit; Income Statement-Debit; and Income Statement-Credit.
Problem 18: A company had revenues of $75,000 and expenses of $62,000 for the accounting period. Which of the following entries could not be a closing entry?
a.income summary 13,000
owners capital 13,000
b.income summary 75,000
Revenues 75,000
c.revenues 75,000
income summary 75,000
d. income summary 62,000
expenses 62,000
e. all of the above are possible closing entries
Problem 19: The following information is available for the Travis Travel Agency. After these closing entries what will be the balance in the Jay Travis, Capital account?
total revenues 125,00
total expenses 60,000
Jay travis, capital 80,000
jay travis, withdrawals 15,000
a. 65,000
b. 80,000
c. 130,000
d. 145,000
e. 280,000
Problem 20: A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below. What amount will be posted to Tricia DeBarre, Capital in the process of closing the Income Summary account? (Assume all accounts have normal balances.)
Tricia De Barre, capital 7,000
Tricia De Barre, withdrawals 9,600
Revenue 29,000
Rent Expense 3,600
Salaries Expense 7,200
Insurance Expense 920
Depr. Expense Equipment 500
Accum depr-equipment 1500
a.16780 debit
b.7180 credit
c.16780 credit
d.18,280 credit
e.23780 credit
Problem 21: J. Awn, the proprietor of Awn Services, withdrew $8,700 from the business during the current year. The entry to close the withdrawals account at the end of the year, is:
a.J awn withdrawals8700
Cash8700
b.J Awn Capital 8700
j Awn withdrawals8700
c. J awn Withdrawals8700
j awn capitals8700
d. j awn capital 8700
Salary Expense 8700
e. Income Summary8700
J Awn Capital8700
100.A company uses the perpetual inventory system and recorded the following entry:
accounts payable2500
Merchandise Inventory50
Cash2450
This entry reflects a:
a.purchase
b.return
c.sale
d.payment of the account payable and recognition of a cash discount taken.
e.Purchase and recognition of a cash discount taken.
Problem 22: On October 1, Robertson Company sold merchandise in the amount of $5,800 to Alberts, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robertson uses the perpetual inventory system. The journal entry or entries that Robertson will make on October 1 is:
a.sales 5800
accounts receivable5800
b.sales 5800
accounts receivable5800
cost of goods sold4,000
merchandise inventory4,000
c. accounts receivable 5,800
sales5,800
d. accounts receivable5,800
sales5,800
Cost of goods sold4,000
Merchandise Inventory4,000
e. accounts receivable 4,000
sales4,000