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 |