Question : 11) On November 1, 2011, Miracles, Inc. borrowed $30,000 12% : 1252973

 

 

11) On November 1, 2011, Miracles, Inc. borrowed $30,000 on 12% note with both interest and principal due on February 1, 2012. The adjusting entry to record interest for the year ended December 31, 2011 is a debit to ________.

A) Interest expense of $300 and a credit to Cash of $300

B) Interest expense of $600 and a credit to Cash of $600

C) Interest expense of $300 and a credit to Interest payable of $300

D) Interest expense of $600 and a credit to Interest payable of $600

12) On October 1, Tim’s Ware accepted a $500 advance payment from a customer and recorded a debit to Cash and a credit to Unearned revenue. On October 10, Tim’s Ware delivered the merchandise to the customer, but made no additional journal entry. Before Tim’s Ware prepares financial statements, the company must ________.

A) do nothing. The cash receipt was properly recorded when the advance payment was received from the customer

B) prepare a closing entry to reduce the balance in Unearned revenue to zero

C) record another journal entry that debits Cash and credits Sales

D) prepare an adjusting entry that debits Unearned revenue and credits Sales

 

13) Which of the following will cause the adjusted trial balance to be out of balance?

A) Transactions were not posted from the journal to the ledger.

B) An adjusting entry to record $400 of prepaid insurance that had expired was recorded as a debit to Prepaid insurance and a credit to Insurance expense.

C) The gain on the sale of a truck was not posted to the general ledger; however, the cash, truck and accumulated depreciation accounts were properly posted.

D) An adjusting entry to record the amount of prepaid insurance that had expired was recorded as a $100 debit to Insurance expense and a $100 credit to Prepaid insurance. However, the $100 amount of the adjusting entry was wrong because $300 of insurance had actually expired.

 

14) Which of the following will cause the adjusted trial balance to be out of balance?

A) An adjusting entry to record the cost of supplies used was recorded as a $200 debit to Supplies expense and a $200 debit to Supplies.

B) An adjusting entry to record the amount of prepaid insurance that had expired was recorded as a $100 debit to Insurance expense and a $100 credit to Prepaid insurance.  However, the $100 amount of the adjusting entry was wrong because $300 of insurance had actually expired.

C) Transactions were not posted from the journal to the ledger.

D) An adjusting entry to record $500 of supplies that were used was recorded as a debit to Supplies and a credit to Supplies expense.

15) B. Row, Inc. issued a 12% note on December 1, 2011 with interest and principal due on January 31, 2012. If the Interest payable account has a zero balance, it must be the case that the ________.

A) debits do not equal the credits on the postclosing trial balance

B) adjusting entries have not yet been recorded

C) debits do not equal the credits in the journal

D) temporary accounts have been closed

 

16) Which of the following events will cause the adjusted trial balance to be out of balance?

A) An adjusting entry to record interest expense was recorded as a debit to Interest receivable and a credit to Interest income.

B) An adjusting entry to record interest expense was recorded as a debit to Interest receivable and a debit to Interest expense.

C) A credit sale made on the last day of the year was not recorded at all.

D) An adjusting entry to record the amount of prepaid insurance that had expired was recorded as a $100 debit to Insurance expense and a $100 credit to Prepaid insurance. However, the $100 amount of the adjusting entry was wrong because $300 of insurance had actually expired.

 

17) Adjustments are usually made ________.

A) after the postclosing trial balance has been prepared

B) at the end of the accounting period after the financial statements are prepared

C) during the accounting period when accruals get too big

D) at the end of the accounting period before financial statements are prepared

18) Ink, Inc. has the following accounts with normal balances on its adjusted trial balance after its first year of business.

 

Cash 

$  400

Accounts receivable

200

Insurance expense

100

Equipment

800

Accumulated depreciation

100

Depreciation expense

100

Sales

1,000

Wages expense

400

Common stock

1,000

Dividends

100

 

How much is the debit column total on the adjusted trial balance?

A) $2,600

B) $2,400

C) $2,100

D) $1,400

 

19) Adjusting entries will always include either a debit to a(n) ________ account or a credit to a(n) ________ account.

A) expense; revenue

B) cash; revenue

C) revenue; expense

D) expense; cash

20) Ink, Inc. has the following accounts with normal balances on its adjusted trial balance after its first year of business.

 

Cash 

$  800

Unearned revenue

300

Insurance expense

200

Equipment

800

Accumulated depreciation

100

Depreciation expense

100

Sales

1,000

Wages expense

400

Common stock

1,000

Dividends

100

 

How much is the credit column total on the adjusted trial balance?

A) $2,600

B) $2,400

C) $2,300

D) $2,200