ACC211: CH.3 MCQ

For the year ended December 31, a company had services revenue of $192,000 and wages expense of $115,200. Dividends of $38,400 were paid during the year. Which of the following entries could not be a closing entry?

Debit Income Summary $192,000; credit Services Revenue $192,000.

The Retained earnings account has a credit balance of $55,000 before closing entries are made. Services revenue for the period is $73,200, wages expense is $48,800, and dividends are $16,200. What is the correct closing entry for the expense accounts?

Debit Income Summary $48,800; credit Wages Expense $48,800.

A company had services revenues of $60,000 and expenses of $46,250 for the accounting period. Dividends of $6,600 were paid in cash during the same period. Which of the following entries could not be a closing entry?

Debit Income Summary $60,000; credit Services Revenue $60,000.

High Step Shoes had annual revenues of $203,000, expenses of $112,700, and dividends of $25,200 during the current year. The retained earnings account before closing had a balance of $315,000. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is:

Debit Income Summary $90,300; credit Retained Earnings $90,300

Harrod Company paid $5,300 for a 4-month insurance premium in advance on November 1, with coverage beginning on that date. The balance in the prepaid insurance account before adjustment at the end of the year is $5,300, and no adjustments had been made previously. The adjusting entry required on December 31 is:

Debit Insurance Expense, $2,650; credit Prepaid Insurance, $2,650. $5,300 × 2/4 = $2,650

On January 1, a company purchased a five-year insurance policy for $3,700 with coverage starting immediately. If the purchase was 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:

Debit Insurance Expense, $740; credit Prepaid Insurance, $740. $3,700 × 1/5 = $740 per year

On December 1, Milton Company borrowed $420,000, at 10% annual interest, from the Tennessee National Bank. Interest is paid when the loan matures one year from the issue date. What is the adjusting entry for accruing interest that Milton would need to make on December 31, the calendar year-end?

Debit Interest Expense, $3,500; credit Interest Payable, $3,500. $420,000 × 0.10 × 30/360 = $3,500

On September 1, Kennedy Company loaned $108,000, at 13% annual interest, to a customer. Interest and principal will be collected when the loan matures one year from the issue date. Assuming adjustments are only made at year-end, what is the adjusting entry for accruing interest that Kennedy would need to make on December 31, the calendar year-end?

Debit Interest Receivable, 4,680; credit Interest Revenue, $4,680. $108,000 × 0.13 × 4/12 = $4,680

Prior to recording adjusting entries, the Office Supplies account had a $390 debit balance. A physical count of the supplies showed $97 of unused supplies available. The required adjusting entry is:

Debit Office Supplies Expense $293 and credit Office Supplies $293.

After preparing and posting the closing entries for revenues and expenses, the income summary account has a debit balance of $23,000. The entry to close the income summary account will be:

Debit Retained Earnings $23,000; credit Income Summary $23,000.

For the year ended December 31, a company has revenues of $319,000 and expenses of $197,000. The company paid $50,800 in dividends during the year. The balance in the Retained earnings account before closing is $83,000. Which of the following entries would be used to close the dividends account?

Debit Retained Earnings $50,800; credit Dividends $50,800.

Castillo Services paid K. Castillo, the sole shareholder of Castillo Services, $6,000 in dividends during the current year. The entry to close the dividends account at the end of the year is:

Debit Retained Earnings $6,000; credit Dividends $6,000

The correct adjusting entry for accrued and unpaid employee salaries of $10,100 on December 31 is:

Debit Salary Expense, $10,100; credit Salaries Payable, $10,100.

The Retained earnings account has a credit balance of $40,000 before closing entries are made. Services revenue for the period is $58,200, wages expense is $41,300, and dividends are $10,200. What is the correct closing entry for the revenue accounts?

Debit Services Revenue $58,200; credit Income Summary $58,200.

A physical count of supplies on hand at the end of May for Masters, Incorporated indicated $1,256 of supplies available. The general ledger balance before any adjustment is $2,160. What is the adjusting entry for supplies that should be recorded on May 31?

Debit Supplies Expense $904 and credit Supplies $904. General Ledger balance − Supplies on hand = Supplies used $2,160 − $1,256 = $904

On December 1, Oren Marketing Company received $4,500 from a customer for a 2-month marketing plan to be completed January 31 of the following year. The cash receipt was recorded as unearned revenue. The adjusting entry for the year ended December 31 would include:

a debit to Unearned Revenue for $2,250.

On April 1, Garcia Publishing Company received $20,880 from Otisco, Incorporated for 36-month subscriptions to several different magazines. The company credited Unearned Revenue for the amount received and the subscriptions started immediately. Assuming adjustments are only made at year-end, what is the adjusting entry that should be recorded by Garcia Publishing Company on December 31 of the first year?

debit Unearned Revenue, $5,220; credit Subscription Revenue, $5,220. $20,880 × 9/36 = $5,220

On April 1, Otisco, Incorporated paid Garcia Publishing Company $2,088 for 36-month subscriptions to several different magazines. Otisco debited the prepayment to a Prepaid Subscriptions account, and the subscriptions started immediately. What amount should appear in the Prepaid Subscription account for Otisco, Incorporated after adjustments on December 31 of the first year assuming the company is using a calendar-year reporting period and no previous adjustment has been made?

$1,566. $2,088/36 = $58 per month Year 1 = $2,088 − ($58 × 9) = $1,566

On May 1, a two-year insurance policy was purchased for $40,800 with coverage to begin immediately. What is the amount of insurance expense that would appear on the company's income statement for the first year ended December 31?

$13,600. $40,800 × 8/24 = $13,600

The following information is available for the Higgins Travel Agency. After closing entries are posted, what will be the balance in the Retained earnings account? Net Income 52,500 Retained Earnings 135,000 Dividends 16,000

$171,500. Ending Retained Earnings Balance = Beginning Retained Earnings Balance + Net Income - Dividends Ending Retained earnings Balance = $135,000 + $52,500−$16,000 = $171,500

A company had no office supplies available at the beginning of the year. During the year, the company purchased $270 worth of office supplies. On December 31, $75 worth of office supplies remained. How much should the company report as office supplies expense for the year?

$195 $270 − $75 = $195

On November 1, Jasper Company loaned another company $160,000 at a 9% interest rate. The note receivable plus interest will not be collected until March 1 of the following year. The company's annual accounting period ends on December 31. The amount of interest revenue that should be reported in the first year is:

$2,400 $160,000 × 0.09 × 60/360 = $2,400

The following information is available for Cubic Company before closing the accounts. After all closing entries are made, what will be the balance in the Retained earnings account? Net income 126,500 Retained earnings 120,000 Dividends 46,000

$200,500. Ending Retained earnings Balance = Beginning Retained earnings Balance + Net Income − Dividends Ending Retained earnings Balance = $120,000 + $126,500 − $46,000 = $200,500

The following information is available from the adjusted trial balance of the Harris Vacation Rental Agency. After closing entries are posted, what will be the balance in the Retained earnings account? Total revenues 195,000 Total expenses 93,600 Retained earnings 124,800 Dividends 23,400

$202,800. Ending Retained earnings = Beginning Retained Earnings + Revenues − Expenses − Dividends Ending Retained earnings Balance = $124,800 + $195,000 − $93,600 − $23,400 = $202,800

The following information is available for the Noir Detective Agency. After closing entries are posted, what will be the balance in the Retained earnings account? Net Loss 33,600 Retained earnings 297,000 Dividends 38,400

$225,000. Ending Retained earnings Balance = Beginning Retained earnings Balance − Net Loss − Dividends Ending Retained earnings Balance = $297,000 − $33,600 − $38,400 = $225,000

A company pays its employees $4,150 each Friday, which amounts to $830 per day for the five-day work week that begins on Monday. If the monthly accounting period ends on Thursday and the employees worked through Thursday, the amount of salaries earned but unpaid at the end of the accounting period is:

$3,320. 4 days × $830/day = $3,320

On January 1, Northern College received $1,380,000 from its students for the spring semester that it recorded in Unearned Revenue. The term spans four months beginning on January 1 and the college earns the revenue evenly over the months of the term. Assuming the college prepares adjustments on January 31, what amount of tuition revenue should the college recognize for the month of January?

$345,000. $1,380,000/4 = $345,000

High Step Shoes had annual revenues of $198,000, expenses of $110,200, and paid dividends of $23,200 during the current year. The retained earnings account before closing had a balance of $310,000. The ending retained earnings balance after closing is:

$374,600 Beginning Retained earnings + Revenues − Expenses − Dividends = Ending Retained earnings $310,000 + $198,000 − $110,200 − $23,200 = $374,600

The Retained earnings account has a credit balance of $30,600 before closing entries are made. If total revenues for the period are $95,200, total expenses are $70,200, and dividends are $16,200, what is the ending balance in the Retained earnings account after all closing entries are made?

$39,400. Ending Retained earnings Balance = Beginning Retained earnings Balance + Revenues − Expenses − Dividends Ending Retained earnings Balance = $30,600 + $95,200 − $70,200 − $16,200 = $39,400

On October 1, Vista View Company rented warehouse space to a tenant for $2,400 per month and received $12,000 for five months' rent in advance on that date, with the lease beginning immediately. The cash receipt was credited to the Unearned Revenue account. The company's annual accounting period ends on December 31. The Unearned Revenue account balance at the end of December, after adjustment, should be:

$4,800. $2,400 × 3 = $7,200 earned $12,000 − $7,200 = $4,800

On July 1, a company paid the $960 premium on a one-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the first year ended December 31?

$480 $960 × 6/12 = $480

On January 1, a company purchased new furniture at a cost of $33,000. The furniture is estimated to have a useful life of 5 years and a salvage value of $3,900. The company uses the straight-line method of depreciation. How much depreciation expense will be recorded for the furniture for the first year ended December 31?

$5,820 ($33,000 − $3,900)/5 years = $5,820 per year.

If Bojana Tax Services' office supplies account balance on March 1 was $1,200, the company purchased $300 of supplies during the month, and a physical count of supplies on hand at the end of March indicated $900 unused, what is the amount of the adjusting entry for office supplies on March 31?

$600 Beginning Supplies + Supplies Purchased − Ending Supplies = Supplies Used $1,200 + 300 − $900 = $600

On April 1, Garcia Publishing Company received $3,348 from Otisco, Incorporated for 36-month subscriptions to several different magazines. The subscriptions started immediately. What is the amount of revenue that should be recorded by Garcia Publishing Company for the first year of the subscription assuming the company uses a calendar-year reporting period?

$837.00. $3,348/36 = $93.00 per month Year 1: $93.00 × 9 months = $837.00 Year 2: $93.00 × 12 months = $1,116.00 Year 3: $93.00 × 12 months = $1,116.00 Year 4: $93.00 × 3 months = $279.00

High Step Shoes had annual revenues of $199,000, expenses of $110,700, and paid dividends of $23,600 during the current year. The retained earnings account before closing had a balance of $311,000. The Net Income for the year is:

$88,300 Revenues $199,000 − Expenses $110,700 = Net Income $88,300

A company reported net income of $4,805 for October. Its net sales for October were $15,500. Its profit margin is:

31% Profit Margin = Net Income/Net Sales Profit Margin = $4,805/$15,500 = 0.31 = 31%

Fragment Company leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $850. Fragment collected the entire $6,800 cash on October 1 and recorded it as unearned revenue. Assuming adjusting entries are only made at year-end, the adjusting entry made on December 31 would be:

A debit to Unearned Revenue and a credit to Rent Revenue for $2,550. $6,800 × 3/8 = $2,550 earned by December 31

On July 1 of the current calendar year, Olive Company paid $8,900 cash for management services to be performed over a two-year period beginning July 1. The adjusting entry on December 31 of the current year for Olive would include:

A debit to an expense and a credit to a prepaid expense for $2,225. $8,900/24 months = $370.83 per month. $370.83 per month × 6 months = $2,225.