Question

 

1. A company purchased a building at the beginning of the year for $200,000 and is using straight-line depreciation to depreciate it over 20 years. The salvage value of the building is $50,000. Prepare the adjusting entry to record the depreciation expense for the current year.
   1. DEBIT: Accumulated Depreciation for $5,000; CREDIT: Depreciation Expense for $5,000
   2. DEBIT: Accumulated Depreciation for $7,500; CREDIT: Depreciation Expense for $7,500
   3. DEBIT: Depreciation Expense for $5,000; CREDIT: Accumulated Depreciation for $5,000
   4. DEBIT: Depreciation Expense for $7,500; CREDIT: Accumulated Depreciation for $7,500

 

2. A company paid cash for equipment in the amount of $17,000. Prepare the general journal entry.
   1. DEBIT: Cash for $17,000; CREDIT: Equipment for $17,000
   2. DEBIT: Equipment for $17,000; CREDIT: Depreciation expense for $17,000
   3. DEBIT: Equipment for $17,000; CREDIT: Note Payable for $17,000
   4. DEBIT: Equipment for $17,000; CREDIT: Cash for $17,000

 

3. To increase a revenue account, you need to ____________ the account.
   1. Debit
   2. Credit

 

4. A company collected a $500 receivable related to a previously recorded sale. Prepare the general journal entry.
   1. DEBIT: Cash for $500; CREDIT: Revenue for $500
   2. DEBIT: Revenue for $500; CREDIT: Cash for $500
   3. DEBIT: Cash for $500; CREDIT: Accounts Receivable for $500
   4. DEBIT: Accounts Receivable for $500; CREDIT: Cash for $500

 

5. A four-year insurance policy in the amount of $40,000 was purchased one year ago. What is the adjusting entry to record insurance expense for the current year?
   1. DEBIT: Prepaid Insurance for $40,000; CREDIT: Insurance Expense for $40,000
   2. DEBIT: Prepaid Insurance for $10,000; CREDIT: Insurance Expense for $10,000
   3. DEBIT: Insurance Expense for $40,000; CREDIT: Prepaid Insurance for $40,000
   4. DEBIT: Insurance Expense for $10,000; CREDIT: Prepaid Insurance for $10,000

 

6. A company received $18,000 from a customer on December 1, 20X1 for future work to be performed and recorded the receipt of cash and the liability to complete the work (credit to unearned revenue). As of the year ended December 31, 20X1, one-third of the work has been completed. Record the necessary adjusting journal entry.
   1. DEBIT: Unearned Revenue for $6,000; CREDIT: Revenue for $6,000
   2. DEBIT: Unearned Revenue for $12,000; CREDIT: Revenue for $12,000
   3. DEBIT: Revenue for $6,000; CREDIT: Unearned Revenue for $6,000
   4. DEBIT: Revenue for $12,000; CREDIT: Unearned Revenue for $12,000

 

7. To decrease an asset account, you need to ____________ the account.
   1. Debit
   2. Credit

 

8. A company declared dividends of $1.50/share when there were 8,000 shares of stock outstanding. The dividends will be paid one month from now. Prepare the general journal entry to record the declaration of the dividends.
   1. DEBIT: Cash for $12,000; CREDIT: Dividends for $12,000
   2. DEBIT: Dividends for $12,000; CREDIT: Cash for $12,000
   3. DEBIT: Dividends for $12,000; CREDIT: Dividends Payable for $12,000
   4. DEBIT: Dividends Payable for $12,000; CREDIT: Cash for $12,000

 

9. A company pays a $2,000 cash dividend that was declared and initially recorded last month. Prepare the general journal entry.
   1. DEBIT: Cash for $2,000; CREDIT: Dividends for $2,000
   2. DEBIT: Dividends for $2,000; CREDIT: Cash for $2,000
   3. DEBIT: Dividends for $2,000; CREDIT: Dividends Payable for $2,000
   4. DEBIT: Dividends Payable for $2,000; CREDIT: Cash for $2,000

 

10. At the end of the year, there is $6,800 worth of employee wages that have been earned by the employees, but not yet paid. Record the adjusting journal entry.
    1. DEBIT: Wages Payable for $6,800; CREDIT: Wage Expense for $6,800
    2. DEBIT: Cash for $6,800; CREDIT: Wage Expense for $6,800
    3. DEBIT: Wage Expense for $6,800; CREDIT: Cash for $6,800
    4. DEBIT: Wage Expense for $6,800; CREDIT: Wages Payable for $6,800

Answer 1

 

Depreciation calculation = 200000-50000/20=7500

1 d) DEBIT: Depreciation Expense for $ 7500;CREDIT:Accumulated depreciation for $ 7500

2 d) DEBIT: Equipment for $17000; CREDIT: Cash for $ 17000

3b) To increase a revenue account you need to Credit the account

4 c) DEBIT: Cash for $ 500; CREDIT: Accounts Receivable for $ 500

5 d) DEBIT: Insurance Expense for $ 10000; CREDIT: Prepaid Insurance for $10000

Prepaid insurance for 4 years =40000

Yearly insurance =40000/4 =10000

6 a) DEBIT: Unearned Revenue for $6000; CREDIT: Revenue for $6000.

Completed work =18000*1/3=6000

7 b) To decrease an Asset account you need to Credit the Account.

8 c) DEBIT: Dividends for $ 12000; CREDIT: Dividend Payable for $ 12000

Dividend declared =8000*1.5=12000

9 d) DEBIT: Dividend Payable for $ 2000; CREDIT: Cash for $ 2000.

10 d) DEBIT: Wage Expense for $ 6800; CREDIT: Wages Payable for $ 6800.