Question

ABC Company had the following transactions during 2019:

May 1: Received $6000 cash in advance for services to be provided over the coming 10 months.

August 5: Sold Merchandise for $7560 including 8% sales tax.

September 1: Borrowed $20000 from FNB bank by issuing 6 months, 6% interest bearing note.

October 10: Sold merchandise on account for $6000 plus 10% sales tax.

December 31: Prepare the adjusting entry to record the service revenue earned.

December 31: Prepare the adjusting entry to record the accrued interest to FNB bank.

December 31: Remitted the sales taxes to the government.

Answer the below questions related to the above transactions:

1) The entry of May 1 transaction should include a: *

a) Service Revenue $6,000

b) Accounts Receivable $6,000

c) Account Payable $6,000

d) Unearned Service Revenue $6,000

2) The Sales Revenue amount of the August 5 transaction is: *

a) $560

b) $604.8

c) $7,000

d) $7,560

3) The entry of August 5 transaction will include: *

a) Debit Cash $7,000

b) Debit Cash $7,560

c) Debit Accounts Receivable $7,000

d) Debit Accounts Receivable $7,560

4) The entry of September 1 transaction is: *

a) Debit Cash and Credit Notes Payable of $20,000

b) Debit Cash and Credit Notes Payable of $21,200

c) Debit Cash and Credit Notes Payable of $15,000

d) Debit Cash and Credit Accounts Payable of $15,000

5) The entry of October 10 will include a credit of: *

a) Sales Revenue $6,000

b) Sales Revenue $6,600

c) Sales Taxes Payable $6,000

d) Sales Taxes Expense $600

6) The entry of October 10 will include a debit of: *

a) Accounts Receivable $6,000

b) Cash $6,000

c) Accounts Receivable $6,600

d) Cash $6,600

7) The earned amount of the service revenue on December 31 is" *

a) $3,500

b) $4,800

c) $4,500

d) $5,000

8) The remaining balance of the Unearned Service Revenue after December 31 is: *

a) Zero

b) 1,200

c) $3,000

d) $4,000

9) The accrued interest amount on December 31 on the borrowed amount from FNB Bank is: *

a) $300

b) $400

c) $500

d) None of the above

10) The amount of Taxes Payable remitted to the government on December 31 is: *

a) $560

b) $1,160

c) $1,720

d) $1,820

Answer 1

Answer to Question 1, 2 & 3:

Answer to Question 4, 5 & 6: