Question :
108. Under accrual accounting, salaries earned by employees but not yet : 1229690
108. 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.
109. Under accrual accounting, fees received in advance from customers should be shown as being earned:
A. When cash is collected.
B. When services are performed or goods delivered.
C. When tax rates are low.
D. When tax rates are high.
110. Dolphin Co. received $1,500 in fees during 2009, 1/3 of which was earned in 2010, the rest was earned when received. The company should report which of the following amounts as income in 2009?
A. $1,500.
B. $500.
C. $1,000.
D. $0.
111. Swordfish Co. earned $75,000 in 2009 and expects to receive 2/3 of the amount in 2010 and the remainder in 2011. How much revenue should they report in 2009?
A. $0.
B. $25,000.
C. $50,000.
D. $75,000.
112. Tuna Co. purchased a building in 2009 for $650,000 and debited an asset called “Buildings” for the entire amount. The company never depreciated the building although it had a useful life of 15 years. This action will cause:
A. Net income to be understated.
B. Net income to be overstated.
C. Net income will not be affected.
D. Total assets will be understated.
113. Leland Corp. has a note receivable from Jewel Co for $50,000. The note matures in 2 years and bears interest of 3%. Leland is preparing financial statements for the quarter ending June 30. Leland should make an adjusting entry:
A. Debiting Interest Revenue for $375 and crediting Interest Receivable for $375.
B. Debiting Interest Receivable for $375 and crediting Interest Revenue for $375.
C. Debiting Interest Revenue for $1,500 and crediting Interest Receivable for $1,500.
D. Crediting Interest Payable for $375 and debiting Interest Expense for $375.
114. Mounder Corp. charges interest on its past due accounts receivable. A late fee of 18% per annum is added to each past due account. Mounder is preparing financial statements for the month of July and has determined there are $18,000 in past due accounts. Mounder should make an adjusting entry as follows
A. Debiting Late Fee Revenue for $270 and crediting Accounts Receivable for $270.
B. Debiting Accounts Receivable for $270 and crediting Late Fee Revenue for $270
C. Debiting Late Fee Revenue for $3,240 and crediting Late Fee Receivable for $3,240.
D. Crediting Late Fee Payable for $270 and debiting Late Fee Expense for $270.
115. 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.
116. Before any month-end adjustments are made, the net income of Russell Company is $38,000. However, the following adjustments are necessary: office supplies used, $3,160; services performed for clients but not yet recorded or collected, $3,040; interest accrued on a note payable to bank, $3,640. After adjusting entries are made for the items listed above, Russell Company’s net income would be:
A. $38,000.
B. $34,240.
C. $41,160.
D. $44,200.
117. Before making month-end adjustments, net income of Bobwhite Company was $232,000 for March. Adjusting entries are necessary for the following items:
-Depreciation for the month of March: $4,300.
-Interest income accrued to March 31, on deposits in banks: $900.
-Supplies used in March: $300.
-Fees earned in March that had been collected in advance: $3,600.
After recording these adjustments, net income for March is:
A. $222,900.
B. $227,700.
C. $231,900.
D. $235,600.
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 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.
118. What amount of interest expense has accrued on the bank loan?
A. $3,200.
B. $3,500.
C. $3,600.
D. $3,900.
119. How much is owed the employees for their wages?
A. $0.
B. $2,560.
C. $5,120.
D. $12,800.
120. What should be the balance of Prepaid Rent on December 31?
A. $0.
B. $7,000.
C. $14,000.
D. $21,000.
121. How much depreciation expense should be recognized for December?
A. $206.
B. $2,472.
C. $12,360.
D. $19,800.
122. What should be the December 31 balance for Unearned Revenue?
A. $0.
B. $1,650.
C. $12,360.
D. $19,800.
