Question

1) A business purchases equipment in exchange for a note payable. This transaction results in

A) a debit to Notes Payable and a credit to Equipment B) an increase in liabilities C) no journal entry because no cash has been paid D) a debit to Equipment and a credit to Accounts Payable

2) Accumulated Depreciation is a(n) ________ account and carries a normal ________ balance.

A) liability; credit B) revenue; debit C) contra asset; credit D) expense; debit

3) Anthony Delivery Service has a weekly payroll of $35,000. December 31 falls on Tuesday and Anthony will pay its employees the following Monday (January 6) for the previous full week. Assume that Anthony has a five-day workweek and has an unadjusted balance in Salaries Expense of $885,000 at December 31. What is the December 31 balance of Salaries Expense after adjusting entries are recorded and posted?

A) $920,000 B) $906,000 C) $899,000 D) $885,000

4) The balances of select accounts of McMurray, Inc. as of December 31, 2018 are given below:
Notes Payable Nshort-term $1,300 Salaries Payable 3,000 Notes Payable Nlong-term 24,000 Accounts Payable 3,300 Unearned Revenue 1,000 Interest Payable 2,400
The Unearned Revenue is the amount of cash received for services to be rendered in January 2019. Interest Payable will be paid on February 5, 2019. What are the total long-term liabilities shown on the balance sheet at December 31, 2018?

A) $4,300 B) $24,000 C) $1,300 D) $3,000

5) A merchandiser reports sales revenue of $25,000 and sales discounts forfeited of $1,500. The merchandiser uses a perpetual inventory system. The first entry in the closing process would include _____.

A) a debit to Income Summary for $25,000 B) a debit to Income Summary for $26,500 C) a credit to Income Summary for $26,500 D) a credit to Income Summary for $25,000

6) Which of the following inventory valuation methods should be used for unique items?

A) first-in, first-out B) weighted-average C) specific identification D) last-in, first-out

Answer 1

Solution 1:

Purchase of equipment in exchange for a note payable results in : A debit to Equipment and credit to Notes Payable. Notes payable will increase the liabilities.

Hence option "B" an increase in liabilities is correct answer.

Solution 2:

Accumulated Depreciation is a Contra Asset account and carries a normal Credit balance.

Hence, Option "C" is correct.

Solution 3:

Since December 31 is Tuesday, 2 days salary is accrued to be paid.

Therefore, Accrued salary expense adjustment = $35000*2/5 = $14,000

December 31 balance of Salaries Expense after adjusting entries = $885000 + $14000 = $899,000

Hence, option "C" is correct.

Solution 4:

total long-term liabilities shown on the balance sheet at December 31, 2018 = Notes Payable long-term = $24,000

Hence option "B" is correct.

Solution 5:

The first entry in the closing process would include a credit to Income Summary for $26,500. ($25000 + $1500)

Hence option "C" is correct.

Solution 6:

Specific identification methods should be used for unique items.

Hence option "C" is correct.