Question :
31) The employees of Dew Drop Inn get paid every : 1253202
31) The employees of Dew Drop Inn get paid every Friday for a 5-day workweek (Monday through Friday). The total payroll is $5,000 per day of work. If the accounting period ends on Wednesday of a given week and the proper adjustment is made on Wednesday, what will be the effect of the adjustment on the company’s financial statements?
A) The balance sheet will report additional salaries expense of $15,000.
B) The balance sheet will report additional salaries expense of $25,000.
C) The income statement will report additional salaries expense of $15,000.
D) The income statement will report additional salaries expense of $25,000.
32) The employees of Dew Drop Inn get paid every Friday for a 5-day work week (Monday through Friday). The total payroll is $5,000 per day of work. If the accounting period ends on Wednesday of a given week, and the proper adjustment is made on Wednesday, what will be the effect of the adjustment on the company’s financial statements?
A) The balance sheet will report Salaries payable of $25,000.
B) The income statement will report additional salaries expense of $25,000.
C) The balance sheet will report Salaries payable of $15,000.
D) The income statement will report Salaries payable of $15,000.
33) The employees of Dew Drop Inn get paid every Friday for a 5-day workweek (Monday through Friday). The total payroll is $5,000 per day of work. If the accounting period ends on Thursday of a given week, what adjustment must be made to the company’s accounting records?
A) Decrease Cash by $20,000 and decrease shareholders’ equity by recognizing Salaries expense for the same amount.
B) Increase Salaries payable by $20,000 and increase shareholders’ equity by recognizing Salaries expense for the same amount.
C) Increase Salaries payable by $20,000 and decrease shareholders’ equity by recognizing Salaries expense for the same amount.
D) No adjustment is necessary because there is no expense until the employees are paid on Friday.
34) The employees of Dew Drop Inn get paid every Friday for a 5-day workweek (Monday through Friday). The total payroll is $5,000 per day of work. If the accounting period ends on Thursday of a given week, and the proper adjustment is made on Thursday, what will be the effect on the company’s accounting system on Friday when the employees are paid for the week?
A) Decrease Cash by $25,000 and decrease shareholders’ equity by recognizing Salaries expense for the same amount.
B) Decrease Cash by $25,000, decrease shareholders’ equity by recognizing Salaries expense for $20,000 and decrease Salaries payable by $5,000.
C) Decrease Cash by $25,000, decrease shareholders’ equity by recognizing Salaries expense for $5,000 and decrease Salaries payable by $20,000.
D) Decrease Cash by $5,000 and decrease shareholders’ equity by recognizing Salaries expense for the same amount.
35) The employees of Dew Drop Inn get paid every Friday for a 5-day workweek (Monday through Friday). The total payroll is $5,000 per day of work. If the accounting period ends on Thursday of a given week, and the proper adjustment is made on Thursday, what will be the effect of the adjustment on the company’s financial statements?
A) The balance sheet will report additional salaries expense of $20,000.
B) The balance sheet will report additional salaries expense of $25,000.
C) The income statement will report additional salaries expense of $20,000.
D) The income statement will report additional salaries expense of $25,000.
36) The employees of Dew Drop Inn get paid every Friday for a 5-day workweek (Monday through Friday). The total payroll is $5,000 per day of work. If the accounting period ends on Thursday of a given week, and the proper adjustment is made on Thursday, what will be the effect of the adjustment on the company’s financial statements?
A) The balance sheet will report Salaries payable of $20,000.
B) The income statement will report additional salaries expense of $25,000.
C) The balance sheet will report additional salaries expense of $20,000.
D) The income statement will report Salaries payable of $20,000.
37) The employees of Dew Drop Inn get paid every Friday for a 5-day workweek (Monday through Friday). The total payroll is $5,000 per day of work. If the accounting period ends on Friday of a given week, what effect will this have on the company’s accounting system?
A) Decrease Cash by $25,000 and decrease shareholders’ equity by recognizing Salaries expense for the same amount.
B) Increase Salaries payable by $25,000 and increase shareholders’ equity by recognizing Salaries expense for the same amount.
C) Increase Salaries payable by $25,000 and decrease shareholders’ equity by recognizing Salaries expense for the same amount.
D) Decrease Cash by $5,000 and decrease shareholders’ equity by recognizing Salaries expense for the same amount.
38) The cost of borrowing money from a creditor is called the principal of the loan.
39) Bankrupt & Baroque, Inc. borrowed $10,000 on January 1 from E-Z Bank for three months at a 6% annual interest rate. The amount of interest due as of January 31 equals $200.
