Ch 3 MCQ ACC1

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 = $115,000 total expenses = $55,200 retained earnings = $73,600 Dividends = $13,800

$119,600

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 = $105,800 Retained Earnings = $102,000 Dividends = $37,000

$170,800.

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 = $62,500 Retained Earnings = $140,000 Dividends = $20,000

$182,500

On April 1, Otisco, Inc. paid Garcia Publishing Company $1,908 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, Inc. 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?

$1908/36 9 months $1,431.

On November 1, Jasper Company loaned another company $140,000 at a 12.0% 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:

$2,800.

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 = $27,600 Retained Earnings = $294,000 Dividends = $36,000

$230,400

If Bojana Tax Services' office supplies account balance on March 1 was $800, the company purchased $750 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?

$650

A company pays its employees $3,650 each Friday, which amounts to $730 per day for the five-day workweek 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:

$730x4= 2,920 $2,920.

A company purchased new furniture at a cost of $17,000 on September 30. The furniture is estimated to have a useful life of 5 years and a salvage value of $2,300. 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?

$735 annual depreciation = (purchase price - salvage value) / useful life subtract annual depreciation from price of asset

On May 1, a two-year insurance policy was purchased for $33,600 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?

(33600/24)=1400 1400x8=11,200 $11200

On January 1, Eastern College received $1,250,000 from its students for the spring semester that it recorded in Unearned Tuition and Fees. The term spans four months beginning on January 2 and the college spreads the revenue evenly over the months of the term. Assuming the college prepares adjustments monthly, what amount of tuition revenue should the college recognize on February 28?

1,250,000/4= $312,500.

On October 1, Vista View Company rented warehouse space to a tenant for $1,900 per month and received $9,500 for five months' rent in advance on that date, with the lease beginning immediately. The cash receipt was credited to the Unearned Rent account. The company's annual accounting period ends on December 31. The Unearned Rent account balance at the end of December, after adjustment, should be:

1900 x 3 months 95000- ^^^^ $3,800.

On April 1, Garcia Publishing Company received $22,680 from Otisco, Inc. for 36-month subscriptions to several different magazines. The company credited Unearned Fees 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?

22680/36=630 630x9=5670 debit Unearned Fees, $5,670; credit Fees Earned, $5,670.

On July 1, a company paid the $2,280 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?

2280/12=1140 $1,140.

On April 1, Garcia Publishing Company received $2,538 from Otisco, Inc. 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?

2538/36=70.5 70.5x9=634.5 $635.00.

A company had no office supplies available at the beginning of the year. During the year, the company purchased $350 worth of office supplies. On December 31, $115 worth of office supplies remained. How much should the company report as office supplies expense for the year?

350-115=235 $235

Fragmental Co. leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $1,100. Fragmental collected the entire $8,800 cash on October 1 and recorded it as unearned revenue. Assuming adjusting entries are only made at year-end, the adjusting entry made by Fragmental Co. on December 31 would be:

8800/8=1100 1100x3=3,300 A debit to Unearned Rent and a credit to Rent Revenue for $3,300.

On July 1 of the current calendar year, Olive Co. paid $8,300 cash for management services to be performed over a two-year period beginning July 1. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. 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 $2,075.

The Retained earnings account has a credit balance of $28,900 before closing entries are made. If total revenues for the period are $90,200, total expenses are $66,400, and dividends are $15,300, what is the ending balance in the Retained earnings account after all closing entries are made?

Beginning RE + NI - Divs $37,400

High Step Shoes had annual revenues of $196,000, expenses of $109,200, and paid dividends of $22,400 during the current year. The retained earnings account before closing had a balance of $308,000. The ending retained earnings balance after closing is:

Beginning RE+ Net Income - Divs $372,400

For the year ended December 31, a company had revenues of $193,000 and expenses of $115,800. $38,600 in dividends were paid during the year. Which of the following entries could not be a closing entry?

Debit Income Summary $193,000; credit Revenues $193,000.

The Retained earnings account has a credit balance of $39,000 before closing entries are made. Total revenues for the period are $57,200, total expenses are $40,800, and dividends are $9,800. What is the correct closing entry for the expense accounts?

Debit Income Summary $40,800; credit Expense accounts $40,800.

A company had revenues of $57,000 and expenses of $44,750 for the accounting period. Dividends of $6,275 were paid in cash during the same period. Which of the following entries could not be a closing entry?

Debit Income Summary $57,000; credit Revenues $57,000

Harrod Company paid $6,400 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 $6,400, and no adjustments had been made previously. The adjusting entry required on December 31 is:

Debit Insurance Expense, $3,200; credit Prepaid Insurance, $3,200.

On January 1, a company purchased a five-year insurance policy for $2,000 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, $400; credit Prepaid Insurance, $400.

On September 1, Kennedy Company loaned $128,000, at 12% 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, 5,120; credit Interest Revenue, $5,120.

Prior to recording adjusting entries, the Office Supplies account had a $367 debit balance. A physical count of the supplies showed $109 of unused supplies available. The required adjusting entry is:

Debit Office Supplies Expense $258 and credit Office Supplies $258.

After preparing and posting the closing entries for revenues and expenses, the income summary account has a debit balance of $38,000. The entry to close the income summary account will be:

Debit Retained earnings $38,000; credit Income Summary $38,000.

Castillo Services paid K. Castillo, the sole shareholder of Castillo Services, $5,800 in dividends during the current year. The entry to close the dividends account at the end of the year is:

Debit Retained earnings $5,800; credit Dividends $5,800

For the year ended December 31, a company has revenues of $325,000 and expenses of $200,000. The company paid $53,200 in dividends during the year. The balance in the Retained earnings account before closing is $89,000. Which of the following entries would be used to close the dividends account?

Debit Retained earnings $53,200; credit Dividends $53,200.

The Retained earnings account has a credit balance of $50,000 before closing entries are made. Total revenues for the period are $68,200, total expenses are $46,300, and dividends are $14,200. What is the correct closing entry for the revenue accounts?

Debit Revenue accounts $68,200; credit Income Summary $68,200.

The correct adjusting entry for accrued and unpaid employee salaries of $8,800 on December 31 is:

Debit Salary Expense, $8,800; credit Salaries Payable, $8,800.

A physical count of supplies on hand at the end of May for Masters, Inc. indicated $1,260 of supplies on hand. The general ledger balance before any adjustment is $2,200. What is the adjusting entry for office supplies that should be recorded on May 31?

Debit Supplies Expense $940 and credit Supplies $940.

A company earned $4,500 in net income for October. Its net sales for October were $15,000. Its profit margin is:

Profit margin = net income / net sales (4500/1500)(100)=30%

High Step Shoes had annual revenues of $205,000, expenses of $113,700, and paid dividends of $26,000 during the current year. The retained earnings account before closing had a balance of $317,000. The Net Income for the year is:

Revenue - expenses 91,300

On December 1, Orenthal Marketing Company received $6,900 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 fees. The adjusting entry for the year ended December 31 would include:

a debit to Unearned Fees for $3,450.

On December 1, Milton Company borrowed $320,000, at 6% 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, $1,600; credit Interest Payable, $1,600.

High Step Shoes had annual revenues of $194,000, expenses of $108,200, and dividends of $21,600 during the current year. The retained earnings account before closing had a balance of $306,000. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is:

revenue-expenses Debit Income Summary $85,800; credit Retained earnings $85,800