135)
On April 1, Griffith Publishing Company received $1,548 from Santa Fe, Inc. for 36-month
subscriptions to several different magazines. The company credited Unearned Fees for the amount
received and the subscriptions started immediately. Assuming adjustments are only made at
year-end, What is the adjusting entry that should be recorded by Griffith Publishing Company on
December 31 of the first year?
A)
debit Unearned Fees, $387; credit Fees Earned, $387.
B)
debit Unearned Fees, $1,161; credit Fees Earned, $1,161.
C)
debit Unearned Fees, $1,548; credit Fees Earned, $1,548.
D)
debit Unearned Fees, $129; credit Fees Earned, $129.
E)
debit Unearned Fees, $516; credit Fees Earned, $516.
136)
On April 1, Griffith Publishing Company received $1,548 from Santa Fe, Inc. for 36-month
subscriptions to several different magazines. The company credited Unearned Fees for the amount
received and the subscriptions started immediately. Assuming adjustments are only made at
year-end, What is the adjusting entry that should be recorded by Griffith Publishing Company on
December 31 of the second year?
A)
debit Unearned Fees, $387; credit Fees Earned, $387.
B)
debit Unearned Fees, $1,161; credit Fees Earned, $1,161.
C)
debit Unearned Fees, $129; credit Fees Earned, $129.
D)
debit Unearned Fees, $1,548; credit Fees Earned, $1,548.
E)
debit Unearned Fees, $516; credit Fees Earned, $516.
137)
On April 1, Santa Fe, Inc. paid Griffith Publishing Company $1,548 for 36-month subscriptions to
several different magazines. Santa Fe debited the prepayment to a Prepaid Subscriptions account,
and the subscriptions started immediately. What amount should appear in the Prepaid Subscription
account for Santa Fe, Inc. after adjustments on December 31 of the first year assuming the
company is using a calendar-year reporting period and no previous adjustment has been made?
A) $387. B) $1,548. C) $0. D) $516. E) $1,161.
138)
On April 1, Santa Fe, Inc. paid Griffith Publishing Company $1,548 for 36-month subscriptions to
several different magazines. Santa Fe debited the prepayment to a Prepaid Subscriptions account,
and the subscriptions started immediately. What amount should appear in the Prepaid Subscription
account for Santa Fe, Inc. after adjustments on December 31 of the second year assuming the
company is using a calendar-year reporting period and the previous year adjustment had been
made?
A) $387. B) $1,548. C) $516. D) $645. E) $0.
139)
On April 1, Santa Fe, Inc. paid Griffith Publishing Company $1,548 for 36-month subscriptions to
several different magazines. Santa Fe debited the prepayment to a Prepaid Subscriptions account,
and the subscriptions started immediately. What adjusting entry should be made by Santa Fe, Inc.
for the adjustment on December 31 of the first year assuming the company is using a calendar-year
reporting period and no previous adjustments had been made?
A)
Debit Subscription Expense $516 and credit Prepaid Subscriptions $516.
B)
Debit Unearned Subscriptions $387 and credit Subscription Expense $387.
C)
Debit Subscription Expense $387 and credit Cash $387.
D)
Debit Prepaid Subscriptions $516 and credit Subscription Expense $516.
E)
Debit Subscription Expense $387 and credit Prepaid Subscriptions $387.
140)
A company made no adjusting entry for accrued and unpaid employee salaries of $9,000 on
December 31. Which of the following statements is true?
A)
It will understate assets by $9,000.
B)
It will overstate assets and liabilities by $9,000.
C)
It will understate net income by $9,000.
D)
It will have no effect on income.
E)
It will understate expenses and overstate net income by $9,000.
141)
The correct adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31 is:
A)
debit Salary Expense, $9,000; credit Cash, $9,000
B)
debit Salary Expense, $9,000; credit Fees Earned, $9,000
C)
debit Salary Expense, $9,000; credit Salaries Payable, $9,000
D)
debit Salary Expense, $9,000; credit Prepaid Salary, $9,000
E)
debit Salaries Payable, $9,000; credit Salary Expense $9,000
142)
A company purchased new furniture at a cost of $14,000 on September 30. The furniture is
estimated to have a useful life of 8 years and a salvage value of $2,000. The company uses the
straight-line method of depreciation. How much depreciation expense will be recorded for the
furniture for the first year ended December 31?
A) $375.00 B) $1,750 C) $437.50 D) $1,500.00 E) $500
143)
A company purchased new furniture at a cost of $14,000 on September 30. The furniture is
estimated to have a useful life of 8 years and a salvage value of $2,000. The company uses the
straight-line method of depreciation. What is the book value of the furniture on December 31 of the
first year?
A) $12,500.00
B) $13,625.00
C) $13,562.50
D) $12,250.00
E) $13,500.00
144)
A company purchased new furniture at a cost of $16,000 on January 1. The furniture is estimated
to have a useful life of 6 years and a $1,000 salvage value. The company uses the straight-line
method of depreciation. What is the book value of the furniture on December 31 of the first year?
A) $13,333 B) $16,000 C) $13,500 D) $15,000 E) $2,500
145)
The balances in Sanchez Accounting Services’ office supplies account on February 1 and February
28 were $1,200 and $375, respectively. If the office supplies expense for the month is $1,900, what
amount of office supplies was purchased during February?
A) $1,500 B) $2,325 C) $3,100 D) $1,525 E) $1,075
146)
If Regent Tax Services’ office supplies account balance on March 1 was $1,400, the company
purchased $675 of supplies during the month, and a physical count of supplies on hand at the end
of March indicated $1,250 unused, what is the amount of the adjusting entry for office supplies on
March 31?
A) $675 B) $1,975 C) $825 D) $525 E) $1,250
147)
A physical count of supplies on hand at the end of May for Masters, Inc. indicated $1,250 of
supplies on hand. The general ledger balance before any adjustment is $2,100. What is the
adjusting entry for office supplies that should be recorded on May 31?
A)
Debit Supplies Expense $1,250 and credit Supplies $2,100.
B)
Debit Prepaid Supplies $850 and credit Supplies Expense $850.
C)
Debit Supplies $1,250 and credit Cash $1,250.
D)
Debit Supplies Expense $1,250 and credit Supplies $1,250.
E)
Debit Supplies Expense $850 and credit Supplies $850.
148)
Which of the following statements is incorrect?
A)
Property, plant, and equipment are referred to as plant assets.
B)
Interim financial reports can be based on one-month or three-month accounting periods.
C)
The fiscal year is any 12 consecutive months (or 52 weeks) used by a business as its annual
accounting period.
D)
An income statement reports revenues earned less expenses incurred.
E)
An unadjusted trial balance shows the account balances after they have been revised to reflect
the effects of end-of-period adjustments.
149)
A trial balance prepared after adjustments have been recorded is called a(n):
A)
Balance sheet.
B)
Classified balance sheet.
C)
Unclassified balance sheet.
D)
Adjusted trial balance.
E)
Unadjusted trial balance.
150)
A trial balance prepared before any adjustments have been recorded is:
A)
An unadjusted trial balance.
B)
Only prepared once a year.
C)
Used to prepare financial statements.
D)
An adjusted trial balance.
E)
Correct with respect to proper balance sheet and income statement amounts.
151)
The adjusted trial balance contains information pertaining to:
A)
All general ledger accounts.
B)
Balance sheet accounts only.
C)
Revenue accounts only.
D)
Income statement accounts only.
E)
Asset accounts only.
152)
Financial statements are typically prepared in the following order:
A)
Income statement, statement of owner’s equity, balance sheet.
B)
Income statement, balance sheet, statement of owner’s equity.
C)
Balance sheet, statement of owner’s equity, income statement.
D)
Balance sheet, income statement, statement of owner’s equity.
E)
Statement of owner’s equity, balance sheet, income statement.
153)
A balance sheet that places the assets above the liabilities and equity is called a(n):
A)
Classified balance sheet.
B)
Account form balance sheet.
C)
Unclassified balance sheet.
D)
Report form balance sheet.
E)
Unadjusted balance sheet.
76
154)
A balance sheet that places the liabilities and equity to the right of the assets is a(n):
A)
Report form balance sheet.
B)
Classified balance sheet.
C)
Unclassified balance sheet.
D)
Account form balance sheet.
E)
Interim balance sheet.
155)
Under the alternative method for accounting for unearned revenue, which of the following pairs of
journal entry formats is correct?
A)
Initial Entry
Adjusting Entry
Consulting Revenue
Unearned Revenue
Cash
Consulting Revenue
B)
Initial Entry
Adjusting Entry
Cash
Unearned Revenue
Unearned Revenue
Cash
C)
Initial Entry
Adjusting Entry
Cash
Consulting Revenue
Consulting Revenue
Unearned Revenue
77
D)
Initial Entry
Adjusting Entry
Cash
Unearned Consulting Revenue
Unearned Consulting Revenue
Consulting Revenue
E)
Initial Entry
Adjusting Entry
Cash
Consulting Revenue
Unearned Revenue
Unearned Revenue
156)
Under the alternative method for recording prepaid expenses, which is the correct set of journal
entries?
A)
Initial Entry
Adjusting Entry
Prepaid Insurance
Cash
Insurance Expense
Prepaid Insurance
B)
Initial Entry
Adjusting Entry
Prepaid Insurance
Insurance Expense
Cash
Prepaid Insurance
C)
Initial Entry
Adjusting Entry
Prepaid Insurance
Prepaid Insurance
Cash
Insurance Expense
D)
Initial Entry
Adjusting Entry
Insurance Expense
Prepaid Insurance
Cash
Insurance Expense
E)
Initial Entry
Adjusting Entry
Cash
Prepaid Insurance
Insurance Expense
Insurance Expense
157)
Which of the following statements related to U.S. GAAP and IFRS is incorrect?
A)
U.S. GAAP balance sheets report current items first.
B)
IFRS balance sheets normally present noncurrent items first.
C)
Both U.S. GAAP and IFRS include guidance for adjusting entries.
D)
U.S. GAAP does not require items to be separated by current and noncurrent classifications
on the balance sheet.
E)
Both U.S. GAAP and IFRS prepare the same four financial statements.
158)
On December 1, Milton Company borrowed $300,000, at 8% annual interest, from the Tennessee
National Bank. Interest is paid when the loan matures one year from the issue date. What is the
adjusting entry for accruing interest that Milton would need to make on December 31, the calendar
year-end?
A)
debit Interest Expense, $2,000; credit Interest Payable, $2,000.
B)
debit Interest Payable, $2,000; credit Interest Expense, $2,000.
C)
debit Interest Expense, $2,000; credit Cash, $2,000.
D)
debit Interest Expense, $4,000; credit Interest Payable, $4,000.
E)
debit Interest Expense, $24,000; credit Interest Payable, $24,000.
159)
On September 1, Kennedy Company loaned $100,000, at 12% annual interest, to a customer.
Interest and principal will be collected when the loan matures one year from the issue date.
Assuming adjustments are only made at year-end, what is the adjusting entry for accruing interest
that Kennedy would need to make on December 31, the calendar year-end?
A)
Debit Cash, $4,000; credit Interest Revenue, $4,000.
B)
Debit Interest Expense, $4,000; credit Interest Payable, $4,000
C)
Debit Interest Expense, $12,000; credit Interest Payable, $12,000
D)
Debit Interest Receivable, $12,000; credit Cash, $12,000
E)
Debit Interest Receivable, $4,000; credit Interest Revenue, $4,000.
160)
A roofing company collects fees when jobs are complete. The work for one customer, whose job
was bid at $3,000, has been completed as of December 31, but the customer has not yet been
billed. Assuming adjustments are only made at year-end, what is the adjusting entry the company
would need to make on December 31, the calendar year-end?
A)
Debit Roofing Fees Revenue, $3,000; credit Accounts Receivable, $3,000
B)
Debit Cash, $3,000; credit Roofing Fees Revenue, $3,000
C)
Debit Roofing Fees Revenue, $3,000; credit Cash, $3,000
D)
Debit Accounts Receivable, $3,000; credit Roofing Fees Revenue, $3,000
E)
No adjustment is required.