In: Accounting
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
| 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 | ||||