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67) On December 31, 2018 the balance in Energy Exploration Company's Unearned Revenue account was
a credit of $10,000. In January, 2019, the company received an advance payment of $11,000 from a new
customer for services to be performed. By January 31, adjustments were made to recognize $6,000 of the
revenue that had been earned during January. What was the balance in Unearned Revenue on January 31,
2019?
A) $6,000 credit
B) $11,000 debit
C) $10,000 credit
D) $15,000 credit
68) Unearned Revenue is a(n) ________ account and carries a normal ________ balance.
A) liability; credit
B) asset; credit
C) revenue; debit
D) asset; debit
69) A company received $5,000 for 100 one-year subscriptions on July 1. The journal entry to record this
cash receipt would include a ________. The company uses a liability account for revenue received in
advance.
A) credit to Accounts Payable for $5,000
B) debit to Prepaid Expenses for $5,000
C) credit to Unearned Revenue for $5,000
D) debit to Note Payable for $5,000
70) Get Away, a travel magazine, collected $500,000 in subscription revenue in May. Each subscriber will
receive an issue of the magazine for each of the next 12 months, beginning with the June issue. The
company uses the accrual method of accounting. Prepare the journal entry for collection of cash in May.
(Ignore explanation). Assume the magazine initially records a liability for the subscription revenue.
71) Sail Away, a cruise industry magazine, collected $480,000 in subscription revenue in May. Each
subscriber will receive an issue of the magazine for each of the next 12 months, beginning with the June
issue. The company uses the accrual basis of accounting. Prepare the adjusting entry needed on June 30.
(Ignore explanation). Assume the magazine initially records a liability for the subscription revenue.
72) On June 1, Edison, Inc. borrowed $21,000 on a one-year Note Payable with an interest rate of 10% per
year. It will repay the principal and interest at the end of the one-year period. The company makes
accrual adjustments at the end of each month. The company should record interest expense of $2,100 on
June 30.
73) An adjusting entry that credits Salaries Payable is an example of a(n) ________.
A) accrued expense
B) deferred revenue
C) accrued revenue
D) deferred expense
74) An expense that has been incurred but not yet paid is called a(n) ________.
A) accrued revenue
B) deferred expense
C) deferred revenue
D) accrued expense
75) Modern Artists' Services signed a contract with a maintenance service company to maintain a
building that Modern Artists' will use as an office. The contract states that the work will begin on
February 1 and end on May 31. Modern Artists' will pay the maintenance service company $8,000 at the
end of May. It accrues Maintenance Expense at the end of every month. What is the balance in the
Accounts Payable account for amounts owed to the maintenance service company at the end of March?
A) Debit balance of $8,000
B) Credit balance of $4,000
C) Debit balance of $4,000
D) Credit balance of $8,000
76) Jupiter, Inc. signed a one-year $24,000 note payable at 8% interest on March 1, 2019. How much
interest expense must be accrued on May 31, 2019? (Round any intermediate calculations to two decimal
places, and your final answer to the nearest whole number.)
A) $1,920
B) $720
C) $480
D) $240
77) Global Enterprises, Inc. signed a one-year $46,000 note payable at 9% interest on April 1, 2018. If
Global only adjusts its accounts once a year at year-end, how much interest expense was accrued on
December 31, 2018? (Round any intermediate calculations to two decimal places, and your final answer to
the nearest whole number.)
A) $1,035
B) $4,140
C) $3,105
D) $3,450
78) Juniper Tree Service has a weekly payroll of $50,000. December 31, 2018 falls on Thursday and
Juniper will pay its employees the following Monday (January 4, 2019) for the previous full week.
Assume that the company has a five-day workweek and has an unadjusted balance in Salaries Expense of
$845,000 at December 31. Prepare the December 31, 2018 adjusting entry.
79) Armstrong Services has a weekly payroll of $50,000. December 31 falls on Thursday and Armstrong
will pay its employees the following Monday (January 4) for the previous full week. Assume that the
company has a five-day workweek and has an unadjusted balance in Salaries Expense of $845,000 at
December 31. Prepare the January 4 journal entry. Reversing entries are not made.
80) The employees of Sinclair Services, Inc. worked the last two weeks of December. They received their
paychecks on January 2. Which of the following accounts should appear on the balance sheet as of
December 31?
A) Accounts Payable
B) Salaries Payable
C) Salaries Expense
D) Prepaid Expense
81) The employees of Leichester Services, Inc. worked the last two weeks of December, 2016. They
received their paychecks on January 2, 2017. Which of the following accounts should appear on the
income statement for the year ended December 31, 2016?
A) Salaries Expense
B) Prepaid Expense
C) Salaries Payable
D) Unearned Revenue
82) Anthony Delivery Service has a weekly payroll of $35,000. December 31 falls on Tuesday and
Anthony will pay its employees the following Monday (January 6) for the previous full week. Assume
that Anthony has a five-day workweek and has an unadjusted balance in Salaries Expense of $885,000 at
December 31. What is the December 31 balance of Salaries Expense after adjusting entries are recorded
and posted?
A) $885,000
B) $920,000
C) $906,000
D) $899,000
83) Mason Painting Services has a weekly payroll of $28,000. December 31 falls on Wednesday and
Mason will pay its employees the following Monday (January 5) for the previous full week. Assume that
Mason has a five-day workweek and has an unadjusted balance in Salaries Expense of $800,000 at
December 31. What amount should be debited to Salaries Expense on December 31?
A) $800,000
B) $11,200
C) $28,000
D) $16,800
84) A business hired a repair service to overhaul its plumbing system. The repair service began work on
September 15 and intends to complete it on October 15. The business will pay the repair service $4,000
when the work is completed. As of September 30, the work was 50% complete. Provide the adjusting
entry to accrue repair expense by the end of September. (Ignore explanation).
85) A business hired a repair service to overhaul its plumbing system. The repair service began work on
September 15 and completed it on October 15. The business agreed to pay the service $4,000 when the
work was completed. As of September 30, the work was 50% complete, and the business made an
adjusting entry to accrue repair expense as of the end of September. On October 15, the work was
completed, and the repair service was paid in full. Provide the journal entry for the cash payment on
October 15. (Ignore explanation).
86) Accrued revenue represents the receipt of cash before the revenue has been earned.
87) Adjusting entries may involve any account, including Cash.
88) Adjusting entries either credit a revenue account or debit an expense account.
89) Laramie, Inc. signed a contract with a service provider for security services at a rate of $310 per month
for the period of January through June. Laramie, Inc. will pay the service provider the entire amount at
the end of June. Laramie, Inc. makes adjusting entries each month. During the month of June, it should
record total security expense of $620.
90) Dress Designers, Inc. has entered into a contract to design 50 new dresses for a customer. It will collect
a total of $42,000 after the design services are complete. Dress Designers started design work on June 1.
As of June 30, it finished 10 of the 50 designs. The company will make an adjusting entry at the end of
June to accrue $10,500 of service revenue.
91) Jones Financial Services, Inc. performed accounting services for a client in December. A bill was
mailed to the client on December 30. The company received the client's check by mail on January 5.
Which of the following accounts should appear on the income statement for the year ended December 31
as related to the services performed?
A) Service Revenue
B) Unearned Revenue
C) Accounts Payable
D) Prepaid Expense
92) Dickens Services, Inc. performed accounting services for a client in December. A bill was mailed to the
client on December 30. The company received a check by mail on January 5. Which of the following
accounts should appear on the balance sheet as of December 31 as related to the services performed?
A) Prepaid Expense
B) Accounts Receivable
C) Unearned Revenue
D) None, there is no entry in December.
93) Accrued revenue is revenue that ________.
A) has been collected and earned
B) the business has collected in cash, but not yet earned
C) the business has earned, but not yet collected in cash
D) will be collected and earned in the future
94) An adjusting entry that debits Accounts Receivable is an example of a(n) ________.
A) deferred expense
B) accrued revenue
C) accrued expense
D) deferred revenue
95) Revenue that has been earned but not yet collected in cash is called a(n) ________.
A) accrued revenue
B) deferred expense
C) deferred revenue
D) accrued expense
96) On January 1, 2017, the Accounts Receivable of Martha, Inc. had a debit balance of $150,000. During
January, the company provided services for $400,000 on account. The company collected $240,000 from
its customers on account in January. What was the ending balance in the Accounts Receivable account at
the end of January?
A) $160,000
B) $550,000
C) $310,000
D) $400,000
