smartbook chapter 3B

Burrow, Inc. borrowed $20,000 with an annual rate of 6%, the note and interest are due at the end of two years. By the end of the first month, the interest incurred equals

$100

the following situations matches a journal entry that debits Deferred Revenue and credits Service Revenue

Goods or services, for which cash was collected in advance, were provided during the current period.

the following transactions do not require an adjusting journal entry for Mueller Corporation on December 31?

On December 21, Mueller Corporation declared and paid dividends. During December, Mueller Corporation sold stock to shareholders

What are the effects on the accounting equation when an adjusting entry is made for goods or services provided during the accounting period related to an amount previously received in advance from a customer?

Total liabilities will decrease and total stockholders' equity will increase.

What are the effects on the accounting equation from the adjustment for salaries incurred but not yet paid during the accounting period?

Total liabilities will increase and total stockholders' equity will decrease.

In recording an accrual adjusting entry to account for revenues earned but not yet collected, ______.

an asset is increased since cash will be collected at a later date

Norbert Company debits Accounts Receivable and credits Service Revenue. As a result of this adjusting entry, Norbert Company's:

assets increase; equity increases

Deferred revenue appears on the ______.

balance sheet as a liability

At the end of December, Berber Company receives a utility bill for $920 associated with its December operations. Berber will pay the bill on January 5. On December 31, Berber should

debit Utilities Expense and credit Utilities Payable

Peter Inc. earned interest on its bank deposit. The interest will be received at the beginning of next year. On December 31, Peter should

debit interest receivable and credit interest revenue

The adjusting entry to record interest owed on obligations at the end of the accounting period includes a debit to "Interest _______" and a credit to "interest _______"

expense; payable

An adjusting entry is necessary to record interest expense at year-end because the interest:

has already been incurred

If an adjusting entry's debit is to an expense account, then the credit must be to which of the following?

liability prepaid expense

all transactions that do not require adjusting entries.

transactions that do not involve revenue or expense activities transactions that result in revenues or expenses being recorded at the same time as the cash flow

the following transactions requires an adjusting entry for accrued revenue

Interest earned, but not yet collected, on a note receivable

When a company records an adjusting entry for services previously recorded as Deferred Revenue, it records which two

credit to Revenue debit to Deferred Revenue

Sabrina Company recorded an adjusting entry for salaries owed to employees at the end of the year. As a result of this entry, Sabrina Company's:

equity decreases liabilities increase

Burrow, Inc. borrowed $20,000 with an annual rate of 6%, the note and interest are due at the end of two years. Calculate the interest for a three-month period.

$300 Reason: $20,000 x 0.06 x 3/12 = $300

Defered Revenue

A liability created when a business collects cash from customers in advance of completing a service or delivering a product.

the following statements describes the effect that adjusting entries may have on liabilities

Adjusting entries increase liabilities for the amount of any accrued and unpaid expenses at the end of the period.

When Pizza Company sells three $100 gift cards at the beginning of the month, it should record a $300 debit to ______ and a $300 credit to ______.

Cash; Deferred Revenue

the following entries records the adjustment for revenue earned, but not yet collected

Debit Accounts receivable and credit Sales revenue.

the following statements is correct regarding the adjusting entry to record interest accrued on a note payable

Interest on the note payable is classified as an expense since it is a cost of borrowing.

On December 1, Emilia Company borrowed $100,000 and signed a promissory note. The principal and interest are due on May 1 of the following year. On December 31, the company accrues interest for the month of December. The company's bookkeeper should debit interest expense and credit

Interest payable

the following statements is correct regarding an adjusting entry for salaries accrued but not paid at the end of the accounting period

Salaries Expense will increase by the amount of the unpaid salaries.

the following transactions do not require an adjusting journal entry for Mueller Corporation on December 31?

Service is provided during December for cash Shipping expense for December is paid in cash

On April 1, Katie Inc. collected $2,400 from a customer for a 12-month membership starting on that date. On December 31, Katie Inc. should credit:

Service revenue for $1,800 reason: Katie already provided service for 9 months; $2,400/12 x 9(/12)

Utility costs that relate to current year's operations but are not paid until the following year require:

a credit to Utilities Payable a debit to Utilities Expense

The adjusting entry for an accrued revenue always includes:

a credit to a revenue account a debit to an asset account

When a company records an adjusting entry for services previously recorded as Deferred Revenue, it records which two of the following?

credit to Revenue debit to Deferred Revenue

An adjusting entry for accrued expenses involves:

debit to an expense and a credit to a liability

Munster Inc. debits Deferred Revenue and credits Service Revenue. As a result of this adjusting entry, Munster's:

equity will increase liabilities will decrease

Besides sales or service revenue, which of the following is another common example of a transaction that is recorded as an accrued revenue

interest revenue

After the adjusting entries have been completed, the adjusted balance in the Interest Payable account represents:

interest that has accrued, but has not been paid, at the end of the period

Deferred revenue is a(n) ______.

liability

The adjusting entry for a deferred revenue includes a debit to a(n) ____ account and a credit to a(n) ____ account

liability; revenue or income

Adjusting entries for accrued expenses ensure that liabilities are reported for all amounts ______ at the end of the accounting period.

owed

After the adjusting entries have been completed, the adjusted balance in the Salaries Payable account represents wages earned by employees, but not yet _______ by the company.

paid or distributed

As of December 31, the end of the accounting period, $700 of salaries to employees have been incurred but not paid. The employees will be paid on January 5. On December 31, which two of the following will occur?

salaries expense will increase by $700 salaries payable will increase by $700

After the adjusting entries have been completed, the adjusted balance in the Deferred Revenue account represents:

the amount of the sales or services still owed to the customer.

After the adjusting entries have been completed, the adjusted balance in the Interest Expense account represents:

total interest that has been paid or accrued during the period

After the adjusting entries have been completed, the balance in the "Salaries Expense" account represents:

total salaries, paid and unpaid, that have been incurred during the accounting period