Question : 91.On December 31, Louis Jeweler’s made an adjusting entry to : 1237585

 

 

91.On December 31, Louis Jeweler’s made an adjusting entry to record $4,200 accrued interest payable on its mortgage. On January 10, the mortgage payment was made. This payment included interest charges of $6,300, $2,100 of which were applicable to the period from January 1 through January 10. When recording this mortgage payment, the accountant should:   

A. Debit Interest Expense $2,100 and debit Accrued Interest Payable $4,200.

 

B. Debit Interest Expense $6,300.

 

C. Debit Accrued Interest Payable $6,300.

 

D. Debit Interest Expense $2,100 and credit Accrued Interest Payable $4,200.

 

 

 

 

92.Under accrual accounting, salaries earned by employees but not yet paid should be expensed:   

A. In the period in which they are earned.

 

B. In the period in which they are paid.

 

C. In the period with the higher earnings.

 

D. In the period with the lower earnings.

 

 

 

 

93.Gordy’s Corp. has seven employees. Each earns $800 per week for a five day work week ending on Friday. This month, the last day of the month falls on a Thursday. The company should make an adjusting entry:   

A. Debiting Wage Expense for $4,480 and crediting Wages Payable for $4,480.

 

B. Debiting Wage Expense for $640 and crediting Wages Payable for $640.

 

C. Crediting Wage Expense for $4,480 and debiting Wages Payable for $4,480.

 

D. Crediting Wage Expense for $640 and debiting Wages Payable for $640.

$800 × 4/5 × 7 = $4,480

 

 

 

Gamma Company adjusts its accounts at the end of each month. The following information has been assembled in order to prepare the required adjusting entries at December 31:(1) A one-year bank loan of $720,000 at an annual interest rate of 6% had been obtained on December 1.(2) The company’s pays all employees up-to-date each Friday. Since December 31 fell on Tuesday, there was a liability to employees at December 31 for two day’s pay. Employees earn a total of $12,800 per week.(3) On December 1, rent on the office building had been paid for three months. The monthly rent is $7,000.(4) Depreciation of office equipment is based on an estimated useful life of five years. The balance in the Office Equipment account is $12,360; no change has occurred in the account during the year.(5) All fees totaling $19,800 were earned during the month for clients who had paid in advance.

 

94.Refer to the information above. What amount of interest expense has accrued on the bank loan?   

A. $3,200

 

B. $3,500

 

C. $3,600

 

D. $3,900

$720,000 × .06 × 1/12 = $3,600

 

 

 

95.Refer to the information above. How much is owed the employees for their wages?   

A. $0

 

B. $2,560

 

C. $5,120

 

D. $12,800

$12,800 × 2/5 = $5,120

 

 

 

96.Refer to the information above. What should be the balance of the Prepaid Rent?   

A. $0.

 

B. $7,000.

 

C. $14,000.

 

D. $21,000.

$7,000 × 2 = $14,000

 

 

 

97.Refer to the information above. How much depreciation expense should be recorded for December?   

A. $206.

 

B. $472.

 

C. $12,360.

 

D. $9,800.

$12,360/60 = $206

 

 

 

98.During the last month of its fiscal year, Echo Lake Resort provided catering services for local business. Echo Lake Resort has not yet received payment from the local business. The entry to record this event is an example of an adjusting entry:   

A. To apportion unearned revenue.

 

B. To accrue an uncollected revenue.

 

C. To record unrecorded expenses.

 

D. To record unearned revenue.

 

 

 

 

99.The accountant for the Grassroots Company failed to make an adjusting entry to record revenue earned but not yet billed to customers. The effect of this error is:   

A. An overstatement of assets and of net income offset by an understatement of owners’ equity.

 

B. An overstatement of net income and an understatement of assets.

 

C. An understatement of assets, net income, and owners’ equity.

 

D. An overstatement of liabilities offset by an understatement of owners’ equity.

 

 

 

 

100.An adjusting entry involving recognition of accrued revenue is necessary at the end of March in which of the following situations?   

A. Midwood Consultants received payment in February for consulting services rendered in March.

 

B. Midwood Consultants began working for a client on March 15; bills will be sent monthly beginning April 15.

 

C. Midwood Consultants made payment in January for office rent for the first three months of the year.

 

D. On March 31, a major customer paid his bill for a consulting job completed in February.