Question

Use the following information to answer the next two questions

On December 31, 2012, Shasha Corporation made an adjusting entry to recognize the correct amount of unearned revenue now earned. Originally, the revenue was recorded in a real account when received.

1. The journal entry on December 31, 2012 would include a debit to which type of account?

A. Asset

B. Liability

C. Owners’ Equity

D. Revenue

E. Expense

2. The journal entry on December 31, 2012 would include a credit to which type of account?

A. Asset

B. Liability

C. Owners’ Equity

D. Revenue

E. Expense

Use the following data for the next five questions:

A partially completed bank reconciliation for RACE Company at December 31, 2012, as well as additional data necessary to answer the questions, follow:

RACE COMPANY

Bank Reconciliation

December 31, 2012

Balance per books $ 15,650

Add: (1)

Deduct: (2)

Adjusted cash balance $

  

Balance per bank statement $ 21,010

Add: (3)

Deduct: (4)

Adjusted cash balance $

Differences between book records and bank statement on December 31, 2012 are as follows:

a. Bank debit memo of $190 for bank fees on overdrawn accounts from December 16-19, 2012.

b. Check no. 2022 (for supplies) was written for $890 but erroneously recorded in Race’s records as $980.

c. An NSF check of Marcy Co., one of Race’s customers), was returned by the bank; amount was $1,900.

d. Check no. 2422 (for insurance) was written for $1,720 but erroneously recorded in Race’s records as $1,270.

e. Deposits in transit at December 31, 2012, totaled $2,720.

f. Outstanding checks at December 31, 2012 totaled $3,700.

g. Bank credit memo of $7,160 for proceeds of note receivable collected by bank for Race on December 28, 2012. $7,000 principal and $160 interest.

h. Bank service charge for December, $280.

i. Bank debit memo for $90 for safe deposit box rental at bank.

j. Bank credit memo for $40 for interest income on Race’s account.

3. In Race’s completed bank reconciliation at December 31, 2012, what dollar amount should be deducted from the balance per bank statement [indicated by (4) above]?

a. $3,700

b. $5,600

c. $3,370

d. $4,150

e. None of the above.

4. In Race’s completed bank reconciliation at December 31, 2012, what dollar amount should be added to the balance per Race’s records [indicated by (1) above]?

f. $7,290

g. $7,740

h. $7,280

i. $7,160

j. None of the above.

5. In Race’s completed bank reconciliation at December 31, 2012, what dollar amount should be deducted from the balance per Race’s records [indicated by (2) above]?

a. $3,100

b. $2,820

c. $2,630

d. $1,100

e. None of the above.

6. In Race’s completed bank reconciliation at Decemberl 31, 2012, what dollar amount should be added to the balance per bank statement [indicated by (3) above]?

a. $2,810

b. $2,760

c. $2,910

d. $2,720

e. None of the above.

7. In Race’s journal entries to correct the Cash book balance on December 31, 2012, the entry for the NSF check would be

a. Debit Cash and credit Accounts Receivable for $1,900.

b. Debit Accounts Payable and credit Cash for $1,900.

c. Debit Accounts Receivable and credit Cash for $1,900.

Answer 1

Problem

On December 31, 2012, Shasha Corporation made an adjusting entry to recognize the correct amount of unearned revenue now earned. Originally, the revenue was recorded in a real account when received.

1. The journal entry on December 31, 2012 would include a debit to which type of account?

A. Asset

B. Liability

C. Owners’ Equity

D. Revenue

E. Expense

Solution:

The correct option is A. Asset

Real Account are the account which deals with the important assets of a business. Hence Cash is an important asset of a business and it is a REAL Account.

2. The journal entry on December 31, 2012 would include a credit to which type of account?

A. Asset

B. Liability

C. Owners’ Equity

D. Revenue

E. Expense

The correct option is D. Revenue

Initially the revenue is recorded in Unearned Revenue Account and now it is earned so we need to transfer the amount from Unearned Revenue account to Revenue Account to record the revenue.

Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you

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