Question

In: Accounting

16.   As prepaid expenses expire with the passage of time, the correct adjusting entry will be...

16.   As prepaid expenses expire with the passage of time, the correct adjusting entry will be

a.         debit to an asset account and a credit to an expense account.

b.         debit to an expense account and a credit to an asset account.

c.          debit to an asset account and a credit to an asset account.

d.         debit to an expense account and a credit to an expense account.

17. Based on the following data, what is the amount of current liabilities?

Accounts payable………………………………………………………..   $62,000

Accounts receivable…………………………………………………….. 100,000

Cash……………………………………………………………………….        70,000

Unearned revenue…………………………………………………           10,000

Inventory………………………………………………………………….     138,000

Long-term investments…………………………………………………. 160,000

Long-term liabilities……………………………………………………… 200,000

Short-term investments………………………………………………….           80,000

Notes payable…………………………………………………………….   56,000

Property, plant, and equipment……………………………………………      1,340,000

Prepaid insurance………………………………………………………..     2,000

a.         $118,000

b.         $128,000

c.          $328,000

d.         None of the above

18. Which of the following is not a current liability?

a. unearned revenue

b. accounts payable

c. notes payable (debt due 3 years from now)

d. notes payable (debt due 3 months from now)

19.   The Vintage Laundry Company purchased $7,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only $2,000 on hand. The adjusting entry that should be made by the company on June 30 is:

a.         debit Laundry Supplies Expense, $2,000; credit Laundry Supplies, $2,000.

b.         debit Laundry Supplies, $5,500; credit Laundry Supplies Expense, $5,500.

c.          debit Laundry Supplies, $2,000; credit Laundry Supplies Expense, $2,000.

d.         debit Laundry Supplies Expense, $5,500; credit Laundry Supplies, $5,500

20. Under the perpetual method of accounting for inventory, when a sale is made on account the following journal entry or journal entries are made;

a. Sales

          Cost of merchandise sold

b. Cash

           Sales

AND

    Cost of merchandise sold

            Merchandise inventory

c. Accounts receivable

              Sales

    AND

Cost of Merchandise sold

               Merchandise Inventory

d. Accounts receivable

                Sales

Solutions

Expert Solution

16) Entry to record expiry of prepaid expenses
Debit Credit
Expense xxx
To Prepaid Expense xxx
Answer: B
17) Computation of current liabilities
Accounts payable $   62,000.00
Unearned revenue $   10,000.00
Notes Payable $   56,000.00
$ 128,000.00
Answer: B
18) Answer: C
19) Adjusting Entry would be:
Debit Credit
Laundry Supplies Expense $ 5,500.00
To Laundry Supplies $ 5,500.00
Answer: D
20) Entry to record sale
Debit Credit
Accounts Receivable xxx
To Sales xxx
Cost of merchandise sold xxx
To Merchandise Inventory xxx
Answer: C

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