Exam 1 CH 4 ACT 20100

Burrows Inc borrowed $1000 on a 3 month note payable and $1000 on a 6 month note payable both at 12% annually. The amount of interest incurred in 1 month will be ___.

the same amount for both notes Interest for one month period = $10 ($1000 x 12% per year X 1/12 of a year)

When expense is incurred: If cash will be paid, the adjusting entry is

ACCRUED EXPENSE Expense (+E, -SE): Debit: xx Payable (+L): Credit: xx

When revenue is earned: If cash will be received, the adjusting entry is

ACCRUED REVENUE Receivable (+A): Debit: xx Revenue (+R, +SE): Credit: xx

When expense is incurred: If cash was paid and previously recorded, the adjusting entry is

DEFERRED REVENUE Expense (+E, -SE): Debit: xx Prepaid Expense (-A): Credit: xx

When revenue is earned: If cash was received and previously recorded, the adjusting entry is:

DEFERRED REVENUE Unearned Revenue (-L): Debit: xx Revenue (+R, +SE): Credit: xx

As of Dec 31, the unadjusted balance in Unearned Revenue contains $5,600 for unredeemed gift cards. An analysis of the monthly sales indicates that $3,200 gift cards were redeemed during the month but not yet recorded. How will these transactions affect the adjustments at the end of the period?

Sales Revenue needs to be increased by the amount of gift cards redeemed during the month Unearned revenue needs to be decreased by the amount of gift cards redeemed during the month

The adjusting entry to record the amounts owed for wages incurred during the period includes a __

credit to wages payable debit to wages expense

The journal entry a law firm records when it provides legal services for a client who will pay in a later period includes a ___

debit to accounts receivable credit to service revenue