Question :
88. Videobusters, Inc. offered books of video rental coupons to its : 1229688
88. Videobusters, Inc. offered books of video rental coupons to its patrons at $40 per book. Each book contained a certain number of coupons for video rentals. During the current period 500 books were sold for $20,000, and this amount was credited to Unearned Rental Revenue. At the end of the period, it was determined that $15,000 worth of book coupons had been used by customers to rent videos. The appropriate adjusting entry at the end of the period would be:
A. Debit Rental Revenue $5,000 and credit Unearned Rental Revenue $5,000.
B. Debit Rental Revenue $15,000 and credit Unearned Rental Revenue $15,000.
C. Debit Unearned Rental Revenue $5,000 and credit Rental Revenue $5,000.
D. Debit Unearned Rental Revenue $15,000 and credit Rental Revenue $15,000.
89. Regal Real Estate which maintains its accounts on the basis of a fiscal year ending June 30, began the management of an office building on June 15 for an agreed annual fee of $4,800. The first payment is due on July 15. The adjusting entry required at June 30 is:
A. A debit to Management Fees Receivable for $200 and a credit to a revenue account for $200.
B. A $200 debit to Unearned Management Fees and a $200 credit to Management Fees Earned.
C. A debit to Cash for $200 and a credit to Management Fees Earned.
D. A debit to Cash for $400 offset by a credit to a revenue account for $200 and a liability for $200.
90. Great Kids Co. began providing day care for the children of employees of a large corporation on January 15 for an agreed monthly fee of $9,000. The first payment is to be received on February 15. The adjusting entry required by Great Kids Co. on January 31 includes:
A. A credit to Child Care Fees Earned of $4,500.
B. A debit to Child Care Fees Receivable of $9,000.
C. A debit to Unearned Child Care Revenue of $4,500.
D. A debit to Fees Receivable of $9,000.
91. Before any month-end adjustments are made, the net income of Bennett Company is $76,000. The following adjustments are necessary: office supplies used, $3,160; services performed for clients but not yet recorded or collected, $3,640; interest accrued on note payable to bank, $3,040. After adjusting entries are made for the items listed above, Bennett Company’s net income will be:
A. $66,160.
B. $78,560.
C. $73,440.
D. $76,000
92. The accountant for Perfect Painting forgot the following two adjustments at the end of 2010:
(a) The entry to record depreciation: $3,000.
(b) The entry to record the portion of fees received in advance which have now been earned: $3,000.
As a result of these two omissions:
A. Net income for Perfect Painting for 2010 is overstated.
B. Net income for Perfect Painting for 2010 is understated.
C. Assets of Perfect Painting are overstated at December 31, 2010.
D. Liabilities of Perfect Painting are understated at December 31, 2010.
93. Before making month-end adjustments, net income of Cardinal Company was $116,000 for March. Adjusting entries are necessary for the following items:
-Depreciation for the month of March: $2,300.
-Interest income accrued to March 31, on deposits in banks: $800.
-Supplies used in March: $100.
-Fees earned in March that had been collected in advance: $2,600.
After recording these adjustments, net income for March is:
A. $112,400.
B. $113,620.
C. $117,000.
D. $110,800.
Omega 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 12% 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 amounting to $6,800.
(3) On December 1, rent on the office building had been paid for four months. The monthly rent is $6,000.
(4) Depreciation of office equipment is based on an estimated useful life of six years. The balance in the Office Equipment account is $9,360; no change has occurred in the account during the year.
(5) Fees of $9,800 were earned during the month for clients who had paid in advance.
94. What amount of interest expense has accrued on the bank loan?
A. $6,400.
B. $7,000.
C. $7,200.
D. $7,800.
95. The accrued interest should be:
A. Debited to Notes Payable.
B. Credited to Interest Payable.
C. Credited to Cash.
D. Credited to Interest Expense.
96. By what amount will the book value of the office equipment decline after the appropriate December adjustment is recorded?
A. $1,560.
B. $130.
C. $0.
D. $1,430.
97. After the appropriate adjusting entry is recorded, the balance in the liability account Unearned Fees will:
A. Decrease by $9,800.
B. Increase by $9,800.
C. Equal $9,800.
D. Be unaffected.
