Accounting Question

MODULE 4
ADJUSTING AND CLOSING ENTRIES - ACCRUALS

Demonstration Problem 1
Anderson Architects
The transactions for the year 2000 for Anderson Architects have already been recorded. This problem
shows how to prepare adjusting entries for December 2000.
Dec. 31
A note payable of $6,000 has been outstanding since September 1, 2000. Under the terms
of the note, the note plus interest (12%) is to be paid on March 1, 2001. No interest has
been recorded on the note.
Dec. 31
Wages of $650 for December will be paid in January.
Dec. 31
Services were performed for a client for $800. The client has not been billed yet.
Dec. 31
Advertising costs of $105 for December will be paid in January.
DATE
2000
Dec. 31
Dec. 31
Dec. 31
Dec. 31
ACCOUNT
DEBIT
Interest Expense
Interest Payable
Wages Expense
Wages Payable
Accounts Receivable
Service Revenue
Advertising Expense
Accounts Payable
240
CREDIT
240
650
650
800
800
105
105
98
Practice Problem 1
Comfort Furniture Company
The transactions for the year 2000 for Comfort Furniture Co. have been recorded in the accounting system.
This assignment requires you to prepare adjusting entries for Comfort Furniture Co. for December 2000.
Dec. 31
Wages owed but unpaid at the end of December were $5,000.
Dec. 31
The company signed a 12%, six-month note for $6,000 on November 1, 2000.
No interest has been recorded for November and December.
Dec. 31
Service provided to a customer for $350 has not been recorded.
Dec. 31
Advertising cost of $90 for December has not been recorded.
DATE
2000
Dec. 31
Dec. 31
Dec. 31
Dec. 31
ACCOUNT
DEBIT
Wages Expense
Wages Payable
Interest Expense
Interest Payable
Accounts Receivable
Service Revenue
Advertising Expense
Accounts Payable
5,000
CREDIT
5,000
120
120
350
350
90
90
99
Practice Assignment 2
Conway Floor Covering Incorporated
The transactions for Conway Floor Covering Inc. for the year 2000 have been recorded in the accounting
system. This assignment requires you to record the adjusting entries for December 2000.
Dec. 31
Performed services for a client for $850. The customer will be billed in January.
Dec. 31
$15,000 was borrowed by signing a 10%, 2 year note on September 1, 2000.

Record the interest on the note.
Dec. 31
Employee wages of $950 for December will be paid in January.
Dec. 31
DATE
2000
Dec. 31
Dec. 31
Dec. 31
Dec. 31
ACCOUNT
DEBIT
Accounts Receivable
Service Revenue
Interest Expense
Interest Payable
Wages Expense
Wages Payable
Advertising Expense
Accounts Payable
850
CREDIT
850
500
500
950
950
95
95
100
Homework Problem 1
Gym on Wheels
Gym on Wheels provides gymnastics lessons at various daycare centers. The transactions for the year 2000
have been recorded in the accounting system. This assignment requires you to prepare adjusting entries for
December 2000.
Dec. 31
The note payable of $8,000 has been outstanding since July 1, 2000. Under the terms of
the note, the note plus interest (12%) is to be paid on July 1, 2001. No interest has been
recorded on the note.
Dec. 31
Instructors salaries of $2,000 for December will be paid in January.
Dec. 31
December fees of $160 will be collected in January.
Dec. 31
$85 will be paid in January for advertising in December.
DATE
2000
Dec. 31
Dec. 31
Dec. 31
Dec. 31
ACCOUNT
DEBIT
Interest Expense
Interest Payable
Salaries Expense
Salaries Payable
Accounts Receivable
Service Revenue
Advertising Expense
Accounts Payable
480
CREDIT
480
2,000
2,000
160
160
85
85
101
Homework Problem 2
Borden Realty
The transactions for Borden Realty for the year 2000 have been recorded in the accounting system. This
assignment requires you to prepare adjusting entries for December 2000.
Dec. 31
Services provided to customers for $2,600 were unrecorded at the end of December.
Dec. 31
$115 will be paid in January for advertising in December.
Dec. 31
$1,080 of salaries earned by employees during December will be paid in January.
Dec. 31
The note payable of $12,000 has been outstanding since September 1, 2000. Under the
terms of the note, the note plus interest (10%) is to be paid on September 1, 2001. No
interest has been recorded on the note.
DATE
2000
Dec. 31
Dec. 31
Dec. 31
Dec. 31
ACCOUNT
DEBIT
Accounts Receivable
Service Revenue
Advertising Expense
Accounts Payable
Salaries Expense
Salaries Payable
Interest Expense
Interest Payable
2,600
CREDIT
2,600
115
115
1,080
1,080
400
400
102
Homework Problem 3
Party Town Incorporated
The transactions for Party Town Inc. for the year 2000 have been recorded in the accounting system. This
Dec. 31
A birthday party was arranged in December. The customer will pay $200 in January.
Dec. 31
Party Town Inc. borrowed $20,000 by signing a 12%, 2 year note on July 1, 2000.
Dec. 31
Employee wages of $750 for December will be paid in January.
Dec. 31
DATE
2000
Dec. 31
Dec. 31
Dec. 31
Dec. 31
ACCOUNT
DEBIT
Accounts Receivable
Service Revenue
Interest Expense
Interest Payable
Salaries Expense
Salaries Payable
Advertising Expense
Accounts Payable
200
CREDIT
200
1,200
1,200
750
750
135
135
103
Homework Problem 4
Star Interior Designs
The transactions for Star Interior Designs for the year 2000 have been recorded in the accounting system.
This assignment requires you to prepare adjusting entries for December 2000.
Dec. 31
Performed services for a client for $1,250. The customer will be billed in January.
Dec. 31
$10,000 was borrowed by signing a 12%, two year note on October 1, 2000.
Dec. 31
Employee wages of $1,150 for December will be paid in January.
Dec. 31
DATE
2000
Dec. 31
Dec. 31
Dec. 31
Dec. 31
ACCOUNT
DEBIT
Accounts Receivable
Service Revenue
Interest Expense
Interest Payable
Salaries Expense
Salaries Payable
Advertising Expense
Accounts Payable
1,250
CREDIT
1,250
300
300
1,150
1,150
115
115
104
Homework Quiz
Accruals
1.
An expense has not been paid and has not yet been recognized in the accounts by a routine entry.
To properly adhere to the Matching Principle, which of the following is required:
a.
Capital Stock entry
b.
Deferral entry
c.
Accrual entry
d.
Inventory entry
2.
Warren, Inc. has wages that have been earned but not paid at the end of the accounting period. The
entry to properly accrue Wages Expense includes:
a.
Wages Payable, debit; Wages Income, credit
b.
Wages Income, debit; Wages Payable, credit
c.
Wages Payable, debit; Wages Expense, credit
d.
Wages Expense, debit; Wages Payable, credit
3.
Warren, Inc. neglects to make the required adjusting entry for wages at the end of the accounting
period. Which of the following statements reflect the impact of this oversight?
a.
Salary Expense for the year is overstated.
b.
Liabilities at the end of the year are understated.
c.
Assets at the end of the year are understated.
d.
Owner's equity at the end of the year is understated.
4.
Accrued Expenses usually appear on the Balance Sheet as:

a.
Cash
b.
Liabilities
c.
Assets
d.
Capital Stock
5.
Accrued Revenue is recorded when:

a.
Services have already been earned and recorded.
b.
Services have already been paid for in cash and are expected to be earned in the upcoming
accounting period.
c.
Services have already been paid for in cash.
d.
Services have been earned but have not yet been recorded.
6.
Accrued Revenue usually appears on the Balance Sheet as:

a.
Cash
b.
Liabilities
c.
Assets
d.
Capital Stock
7.
At December 31, 2002, interest expense of $960 is owed on a two-year bank note that will not be
paid until July 2003, what is the appropriate accrual at the end of 2002?
a.
Interest Expense ..................
960
Cash ............................
960
105
b.
c.
d.
Interest Payable ..................

Interest Expense .................
Cash ..............................
Interest Expense ..............
Interest Expense ..................
Interest Payable ..............
960
960
.
960
960
960
960
8.
Scott's Lawn Service borrowed $10,000 from 3rd National Bank on November 1, 2001. The loan
is for a term of three years and carries a 10% rate of interest. Interest is due at the maturity of the
loan. The entry to properly accrue 2001 Interest Expense should include:
a.
A debit to Interest Expense and a credit to Interest Payable.
b.
A debit to Interest Expense and a credit to Cash.
c.
A debit to Interest Expense and a credit to Accounts Receivable.
d.
A debit to Interest Expense and a credit to Loan Receivable.
9.
loan. To properly accrue interest expense in 2001, Scott should:
a.
Do nothing as the loan is not due until November 2004.
b.
Recognize Interest Expense for 2 of the loan's 36-month term.
c.
d.
10.
loan. To properly accrue interest expense in 2001, Scott should debit Interest Expense and credit
Interest Payable for:
a.
$1,500
b.
$1,000
c.
$ 500
d.
$ 250
11.
loan. To properly accrue interest expense in 2002, Scott should debit Interest Expense and credit
Interest Payable for:
a.
$1,500
b.
$1,000
c.
$ 500
d.
$ 250
12.
Sandra's Styling Salon, a Sole Proprietorship, pays weekly salaries of $5,000 each Friday for a
five-day week ending on that day. The accrual required for a fiscal period ending on Thursday is:
a.
Debit Salaries Payable, $4,000; credit Cash, $4,000
b.
Debit Salary Expense, $4,000; credit Drawing, $4,000
c.
Debit Salary Expense, $4,000; credit Salaries Payable, $4,000
d.
Debit Drawing, $4,000; credit Cash, $4,000
106
13.
five-day week ending on that day. The accrual required for a fiscal period ending on a Tuesday
includes a debit to Salaries Expense and a credit to Salaries Payable for:
a.
$1,600
b.
$2,000
c.
$3,000
d.
$3,200
14.
five-day week ending on that day. If $4,000 is accrued as Salaries Payable in the current fiscal
period, the payment of salaries on the first Friday of the next fiscal period will include a:
a.
Debit to Salaries Expense for $4,000.
b.
Debit to Salaries Expense for $5,000.
c.
Debit to Salaries Payable for $5,000.
d.
Debit to Salaries Payable for $4,000.
15.
Pace's Hardware, a Corporation, pays its employees each Friday for a five-day total workweek.
The payroll is $12,000 per week. If the end of the accounting period occurs on a Wednesday, the
adjusting entry to record Salaries Payable would include a:
a.
Debit to Salary Expense of $4,800.
b.
Debit to Salary Expense of $6,000.
c.
Credit to Salaries Payable of $2,400.
d.
Credit to Salaries Payable of $7,200.
16.
17.
Rental Services, Inc. earned $2,000 of Rental Revenue in December 2001, but does not expect
payment until January 2002. What is the appropriate accrual entry at December 31, 2001?
a.
Debit Rent Receivable; credit Cash.
b.
Debit Rent Receivable; credit Rent Revenue.
c.
Debit Rent Revenue; credit Rent Receivable
d.
Debit Cash; credit Rent Revenue
Rental Services, Inc. reviews its records at the end of December 2001 in anticipation of the end of
its calendar year. This process reveals that:
2,000 of Accounts Receivable outstanding at the beginning of December has been collected and
recorded.
The December utility bill has not yet been paid. A phone call to the provider reveals that the
invoice will total $1,200 and will be mailed on January 4, 2002.
Billing of $25,000 has been issued for the month.
Services of $5,000 to Construction Experts were completed on December 30, 2001, but billing
will not be rendered until January 3, 2002.
If Rental Services takes no action on any of the above items:
a.
Expenses for 2001 will be overstated by $1,200.
b.
Expenses for 2001 will be understated by $5,000.
c.
Expenses for 2002 will be overstated by $1,200.
d.
Expenses for 2002 will be understated by $5,000.
18.
$2,000 of Accounts Receivable outstanding at the beginning of December has been collected
and recorded.
107

a.
Revenues for 2001 will be overstated by $1,200.
b.
Revenues for 2001 will be understated by $5,000.
c.
Revenues for 2002 will be overstated by $1,200.
d.
Revenues for 2002 will be understated by $5,000.
19.
and recorded.
a.
Assets for 2001 will be overstated by $1,200.
b.
Assets for 2001 will be understated by $5,000.
c.
Liabilities for 2001 will be overstated by $1,200.
d.
Liabilities for 2001 will be understated by $5,000.
20.
and recorded.
Rental Services makes all appropriate accrual entries resulting from the above information.
Revenues and expenses for the month of December, 2001 total:
a.
Revenues: $25,000; Expenses: $ -0b.
Revenues: $30,000; Expenses: $ 1,200
c.
Revenues: $25,000; Expenses: $ 1,200
d.
Revenues: $30,000; Expenses: $ -0-
21.
Tony's Landscaping Service borrowed $5,000 from a bank by signing a 12%, one-year note on
October 1, 2000. What is the amount of interest expense recognized on December 31, 2000?
a.
$600
b.
$150
c.
$200
d.
$0
108
22.
October 1, 2000. Interest is accrued on December 31, 2000, by:
a.
Crediting Interest Expense; debiting Cash
b.
Debiting Interest Expense; crediting Interest Payable
c.
Debiting Interest Expense; crediting Notes Payable
d.
Debiting Interest Expense; crediting Cash
23.
October 1, 2000. The total amount (including interest) of cash paid on October 1, 2001, to the
bank is:
a.
$5,600
b.
$5,000
c.
$6,200
d.
$5,450
24.
October 1, 2000. The note and the interest are paid on October 1, 2001. However, interest for
2000 was accrued on December 31, 2000. When the note is repaid on October 1, 2001, Interest
Expense is debited by:
a.
$0
b.
$600
c.
$450
d.
$150
25.
A company pays its employees every Friday. The amount paid every week is $120 per day.
September 30, 2000, is a Tuesday. The amount of salary accrued on September 30, 2000, is:
a.
$0
b.
$240
c.
$360
d.
$600
26.
A company pays its employees every Friday. The amount paid every week is $600.
September 30, 2000, is a Tuesday. The amount of salary paid on October 3, 2000 is:
a.
$0
b.
$240
c.
$360
d.
$600
27.
A company pays its employees every Friday. The amount paid every week is $600. September 30,
2000, is a Tuesday. Assume that salaries for September were accrued on September 30. The
amount of salaries expense recognized on October 3, 2000 is:
a.
$0
b.
$240
c.
$360
d.
$600
109
28.
2000, is a Tuesday. Which of the following statements is true about the entry prepared on
September 30, 2000?
a.
Salaries payable must be debited by $240
b.
Salaries Payable must be credited by $240
c.
Salaries Payable must be debited by $360
d.
29.
2000, is a Tuesday. Assume that salaries for September were accrued on September 30. Which of
the following statements is true about the entry prepared on October 3, 2000?
a.
Salaries payable must be debited by $240
b.
c.
Salaries Payable must be debited by $360
d.
30.
Accrued expenses occur when:

a.
Cash is paid before an expense is recognized
b.
Cash is paid after an expense is recognized
c.
An expense is recognized at the same time as the cash payment
d.
A liability is decreased when the expense is recognized
110
MODULE 4
ADJUSTING AND CLOSING ENTRIES - DEFERRALS
Anderson Architects
The transactions for the year 2000 for Anderson Architects have already been recorded. This problem
shows how to prepare adjusting entries for Anderson Architects for December 2000.
Dec. 31
A computer was purchased on January 1, 1998 for $1,600. The useful life of the computer
is 4 years.
Dec. 31
On October 1, 2000, Anderson Architects had paid $4,800 as rent for a six month period.
This had been recorded as prepaid rent.
Dec. 31
The amount of supplies available at the end of December was $200. The amount of
supplies at the beginning of the period was $450. $250 of supplies were purchased
during the year.
Dec. 31
Furniture costing $3,000 was purchased on Jan 1, 1997. The useful life of the furniture is
estimated to be 5 years.
Dec. 31
Services were provided to a customer for $450. The cash was collected in advance on
November 28, 2000.
DATE
2000
Dec. 31
Dec. 31
Dec. 31
Dec. 31
Dec. 31
ACCOUNT
Depreciation Expense
Accumulated Depreciation
Rent Expense
Prepaid Rent
Supplies Expense
Supplies
Unearned Revenue
Service Revenue
DEBIT
CREDIT
400
400
2,400
2,400
500
500
600
600
450
450
111
Practice Problem 1
Comfort Furniture Company
The transactions for the year 2000 for Comfort Furniture Co. have been recorded in the accounting system.
This assignment requires you to prepare adjusting entries for Comfort Furniture for December 2000.
Dec. 31
supplies at the beginning of the period was $1,100.
Dec. 31
On January 1, 1998, Comfort Furniture purchased a computer for $2,400. The estimated
useful life of the computer is 4 years. Record the depreciation for the year 2000.
Dec. 31
On November 1, 2000, Comfort Furniture paid $2,400 as rent for a three month period.
DATE
2000
Dec. 31
Dec. 31
Dec. 31
ACCOUNT
Supplies Expense
Supplies
Rent Expense
Prepaid Rent
DEBIT
CREDIT
600
600
600
600
1,600
1,600
112
Practice Assignment 2
Conway Floor Covering Incorporated
The transactions for Conway Floor Covering Inc. for the year 2000 have been recorded in the accounting
system. This assignment requires you to prepare adjusting entries for December 2000.
Dec. 31
Services were provided to a customer for $550. The cash was collected in advance on
December 10, 2000.
Dec. 31
On September 1, 2000, Conway Floor Covering Inc. had paid $5,400 as rent for a six
month period. This had been recorded as prepaid rent.
Dec. 31
supplies at the beginning of the period was $260. $350 of supplies were purchased
during the year.
Dec. 31
A computer was purchased on January 1, 1998, for $2,400. The useful life of the
computer is 4 years.
DATE
2000
Dec. 31
Dec. 31
Dec. 31
Dec. 31
ACCOUNT
Unearned Revenue
Service Revenue
Rent Expense
Prepaid Rent
Supplies Expense
Supplies
DEBIT
CREDIT
550
550
3,600
3,600
210
210
600
600
113
Homework Problem 1
Gym on Wheels
Gym on Wheels provides gymnastics lessons at various daycare centers. The transactions for the year 2000
have been recorded in the accounting system. This assignment requires you to prepare adjusting entries for
December 2000.
Dec. 31
A number of children registered on December 1 and paid the month's fees in advance.
These fees totaled $500 and unearned revenue was credited when the fees were paid.
Dec. 31
supplies at the beginning of the period was $1,500.
Dec. 31
On January 1, 1998, Gym on Wheels had purchased a computer for $2,000. The
estimated useful life of the computer is 4 years. Record the depreciation for 2000.
Dec. 31
On December 1, 2000, Gym on Wheels had paid $2,400 as rent for a three month period.
DATE
2000
Dec. 31
Dec. 31
Dec. 31
Dec. 31
ACCOUNT
Unearned Revenue
Service Revenue
Supplies Expense
Supplies
Rent Expense
Prepaid Rent
DEBIT
CREDIT
500
500
1,000
1,000
500
500
800
800
114
Homework Problem 2
Borden Realty
The transactions for Borden Realty for the year 2000 have been recorded in the accounting system. This
Dec. 31
A computer was purchased for $1,600 on January 1, 1998. The useful life of the computer
is 4 years.
Dec. 31
Furniture costing $4,800 was purchased on January 1, 2000. The useful life of the
furniture is estimated to be 10 years and the salvage value is $800.
Dec. 31
supplies at the beginning of the period was $1,000. $1,850 of supplies were purchased
during 2000.
Dec. 31
On September 1, 2000, Borden Realty had paid $6,600 as rent for a six month period.
DATE
2000
Dec. 31
Dec. 31
Dec. 31
Dec. 31
ACCOUNT
Supplies Expense
Supplies
Rent Expense
Prepaid Rent
DEBIT
CREDIT
400
400
400
400
2,000
2,000
4,400
4,400
115
Homework Problem 3
Party Town Incorporated
The transactions for Party Town Inc. for the year 2000 have been recorded in the accounting system. This
Dec. 31
Depreciation on the building owned by Party Town Inc. is estimated to be $12,500 for the
period.
Dec. 31
Party Town Inc. purchased furniture for $4,200 on January 1, 1997. The estimated useful
life of the furniture is seven years. Record the depreciation for 2000.
Dec. 31
Excess space in the building was rented to another business on October 1, 2000, and six
months' rent of $7,200 was collected in advance.
Dec. 31
The amount of party supplies available at the end of December was $150. The amount of
supplies at the beginning of the period was $200. $550 of supplies were purchased during
2000.
DATE
2000
Dec. 31
Dec. 31
Dec. 31
Dec. 31
ACCOUNT
Unearned Rent Revenue
Rent Revenue
Supplies Expense
Supplies
DEBIT
CREDIT
12,500
12,500
600
600
3,600
3,600
600
600
116
Homework Problem 4
Star Interior Designs
The transactions for Star Interior Designs for the year 2000 have been recorded in the accounting system.
This assignment requires you to record the adjusting entries for December 2000.
Dec. 31
Depreciation on a truck owned by Star Interior Designs is estimated to be $1,250 for the
period.
Dec. 31
Furniture costing $3,600 was purchased on January 1, 1997. The estimated useful life of
the furniture is six years. Record the depreciation for 2000.
Dec. 31
Six months' rent of $7,200 was paid in advance on October 1, 2000.
Dec. 31
supplies at the beginning of the period was $200. $550 of supplies were purchased during
the year.
DATE
2000
Dec. 31
Dec. 31
Dec. 31
Dec. 31
ACCOUNT
Rent Expense
Prepaid Rent
Supplies Expense
Supplies
DEBIT
CREDIT
1,250
1,250
600
600
3,600
3,600
500
500
117
Homework Quiz
Deferrals
1.
Rental Services, Inc. (RSI) records all advance rental receipts in the liability account, Unearned
Rent. What entry does RSI make to record the receipt of these advance receipts?
a.
Debit: Unearned Rent; Credit: Rent Revenue
b.
Debit: Cash; Credit: Unearned Rent
c.
Debit: Unearned Rent; Credit: Rent Expense
d.
Debit: Rent Expense; Credit: Cash
2.
Advance payments for services are called:

a.
Unrecorded Revenues
b.
Unrecorded Expenses
c.
Prepaid Expenses
d.
Unearned Revenues
3.
The adjusting entry required to record depreciation on a building for the fiscal period consists of:
a.
Debit: Depreciation Expense; Credit: Building
b.
Debit: Depreciation Expense; Credit: Accumulated Depreciation
c.
Debit: Accumulated Depreciation; Credit: Depreciation Expense
d.
Debit: Building; Credit: Depreciation
4.
Depreciation Expense and Accumulated Depreciation are classified, respectively, as:

a.
Depreciation Expense: Expense; Accumulated Depreciation: Contra Asset
b.
Depreciation Expense: Asset Deferral; Accumulated Depreciation: Contra Asset
c.
Depreciation Expense: Expense; Accumulated Depreciation: Asset
d.
Depreciation Expense: Contra Asset; Accumulated Depreciation: Expense
5.
Caldwell Rentals receives rent for January 2002 from a tenant in December 2001. This payment
will be:
a.
A 2001 Revenue
b.
A 2002 Expense
c.
A 2001 Expense
d.
A 2001 Liability
6.
Rental Services, Inc. (RSI) pays $5,700 for three years' rent on its Office Building on August 1,
2001. The entry to record this transaction involves which of the following account titles and
classifications?
a.
Debit: Prepaid Rent, Asset; Credit: Cash, Asset
b.
Debit: Cash, Asset; Credit: Unearned Rent, Asset
c.
Debit: Rent Expense, Expense; Credit: Cash, Asset
d.
Debit: Unearned Rent, Asset; Credit: Cash, Asset
7.
Rental Services, Inc. (RSI) pays $7,500 for four years' rent on its Office Building on August 1,
2001. The adjusting entry required at December 31, 2001 is:
a.
Debit: Prepaid Rent; Credit: Cash
b.
Debit: Rent Expense; Credit: Unearned Rent
118
c.
Debit: Rent Expense; Credit: Prepaid Rent
d. Debit: Unearned Rent; Credit: Cash 
8.
Rental Services, Inc. (RSI) pays $10,800 for three years' rent on its Office Building on August 1,
2001. The dollar amount of the adjusting entry required at December 31, 2001 and 2002 is:
a.
December 21, 2001: $1,500; December 31, 2002: $3,600
b.
c.
d.
9.
Karl Company, a Sole Proprietorship, signed a two-year rental agreement on October 1, 2001, for
$9,600. The agreement covers its building for the next two years. Karl debited Prepaid Rent to
record the payment. The December 31, 2001 adjusting entry includes a credit to:
a.
Rent Expense of $1,200
b.
Rent Expense of $8,400
c.
Prepaid Rent of $1,200
d.
Prepaid Rent of $8,400
10.
At the beginning of the year, the Unearned Rent account has a balance of $30,000. The Unearned
Rent account balance at the end of the year is $6,000. Given this information, Rent Revenue for the
current year must be:
a.
$30,000
b.
$24,000
c.
$12,000
d.
$ 6,000
11.
The asset account, Supplies, has a balance of $1,950 at the beginning of the year and was debited
during the year for $5,600, representing the total of supplies purchased during the year. If $1,500
of supplies is on hand at the end of the year, Supplies Expense reported on the income statement
for the year is:
a.
$1,500
b.
$1,900
c.
$5,600
d.
$6,050
12.
At the beginning of the period, Stenger, Inc. had $3,600 in the asset account, Supplies. During the
period, it purchased $1,400 of additional items, debiting the Supplies asset account. At the end of
the period, Stenger determined that only $1,200 of supplies were still on hand. What adjusting
entry should Stenger, Inc. make at the end of the period?
a.
Debit: Supplies ..........................
1,200
Credit: Supplies Expense ................
1,200
b.
Debit: Supplies ..........................
3,400
Credit: Supplies Expense ................
3,400
c.
Debit: Supplies Expense .................. 3,800
Credit: Supplies ........................
3,800
d.
13.
Debit: Supplies Expense ..................

Credit: Supplies ........................
1,200
1,200
The Unearned Revenue account before adjustment at the end of the month has a credit balance of
$2,400, representing an advance payment received on the first day of the month. If $1,600 of
119
Revenue is earned during the month, the balance in the Unearned Revenue at the end of the month,
after adjustments, is:
a.
$ 800 credit
b.
$1,600 credit
c.
$2,400 credit
d.
$4,000 credit
14.
The Unearned Rent account has a beginning credit balance of $15,000. After adjusting entries at
the end of the accounting period, $5,000 of the $15,000 is unearned. The adjusting entry required
at the end of the period is:
a.
Debit: Unearned Rent; Credit: Rent Revenue
b.
Debit: Cash; Credit: Unearned Rent
c.
Debit: Unearned Rent; Credit: Rent Expense
d.
Debit: Rent Expense; Credit: Cash
15.
The Unearned Rent account has a beginning credit balance of $15,000. After adjusting entries at
the end of the accounting period, $5,000 of the $15,000 is unearned. The amount of the adjusting
entry required at the end of the period is:
a.
$15,000
b.
$10,000
c.
$ 5,000
d.
$ -0-
16.
2,000 of Accounts Receivable outstanding at the beginning of December has been collected and
recorded.
The December bills have all been paid. Expenses total $15,500.
Billing for December services amounted to $25,000.
The adjusted balance in the Unearned Revenue account at the end of the month should be a
$10,000 credit. Its balance prior to adjustments was $18,000.
Rental Services, Inc.'s Revenues for December, 2001 are: 
a.
$25,000
b.
$33,000
c.
$35,000
d.
$43,000
17.
Failing to adjust an Unearned Revenue that has been partially earned and was originally recorded
as a credit to Unearned Revenue will usually result in an:
a.
Overstatement of Revenues and an overstatement of Liabilities
b.
Overstatement of Revenues and an understatement of Liabilities
c.
Understatement of Revenues and an understatement of Liabilities
d.
Understatement of Revenues and an overstatement of Liabilities 
120
18.
Copko Computer Services, a Sole Proprietorship, purchased new Computer Equipment for
$52,000 on January 1, 2001. Copko assigned it a four-year life and a $6,000 salvage value.
Depreciation Expense for 2001 amounts to:
a.
$11,500
b.
$13,000
c.
$14,500
d.
$15,000
19.
$52,000 on January 1, 2001. Copko assigned it a four-year life and a $6,000 salvage value. Book
Value at the end of 2001 is:
a.
$46,500
b.
$40,500
c.
$34,500
d.
$34,000
20.
$52,000 on January 1, 2001. Copko assigned it a four-year life and a $6,000 salvage value.
Depreciation Expense for 2003 and Accumulated Depreciation at the end of 2003 are:
a.
Depreciation Expense: $11,500; Accumulated Depreciation: $11,500
b.
c.
d.
21.
A company purchased furniture for $2,800 on January 1, 1998. The useful life of the
furniture is estimated to be seven years. The depreciation expense for 2000 is:
a.
$400
b.
$1,200
c.
$800
d.
$1,600
22.
A company purchased furniture for $2,800 on January 1, 1998. The useful life of the furniture is
estimated to be seven years. The balance in accumulated depreciation after posting the adjustments
for 2000 is:
a.
$400
b.
$1,200
c.
$800
d.
$1,600
23.
A company purchased furniture for $2,800 on January 1, 1998. The useful life of the
furniture is estimated to be seven years. The book value of the furniture after posting the
adjustments for 2000 is:
a.
$400
b.
$1,200
c.
$800
d.
$1,600
24.
A company pays rent of $1,800 for three months in advance on November 1, 2000. Which of the
following statements is true for the journal entry prepared on November 1?
121
a.
b.
c.
d.
Rent Expense is debited

Prepaid Rent is debited
Prepaid Rent is credited
Cash is debited
25.
A company pays rent of $1,800 for three months in advance on November 1, 2000. Which of the
following statements is true for the journal entry prepared on December 31?
a.
Rent Expense is debited
b.
Prepaid Rent is debited
c.
Rent Expense is credited
d.
Cash is credited
26.
The balance in the Supplies account of a company on January 1, 2000 was $250. Supplies were
purchased for $650 in 2000. The balance in the Supplies account on December 31, 2000, was
$350. The Supplies Expense for 2000 was:
a.
$750
b.
$550
c.
$350
d.
$650
27.
The balance in the Supplies account of a company on January 1, 2000 was $250. Supplies were
purchased for $650 in 2000. The balance in the Supplies account on December 31, 2000, was
$350. The Supplies Expense is recorded by:
a.
Debiting Supplies Expense; crediting Cash
b.
Debiting Supplies; crediting Cash
c.
Debiting Supplies Expense; crediting Supplies
d.
Debiting Supplies; crediting Supplies Expense
28.
A company sold subscriptions for six months on October 1, 2000. $600 was collected in advance
from customers. Which of the following statements is true about the entry prepared on October 1?
a.
Revenue is credited
b.
Cash is credited
c.
Unearned Revenue is credited
d.
Unearned Revenue is debited
29.
A company collected $600 on October 1, 2000, from customers for magazine subscriptions for six
months from that date. An adjusting entry is prepared on December 31, 2000, by:
a.
Debiting Unearned Revenue; crediting Cash
b.
Debiting Unearned Revenue; crediting Revenue
c.
Debiting Revenue; crediting Unearned Revenue
d.
Debiting Accounts Receivable; crediting Revenue
30.
Which of the following statements is true about deferred revenues?

a.
A liability is increased when cash is collected in advance
b.
A liability is decreased when cash is collected in advance
c.
A liability is increased when revenue is recognized
d.
Revenue is recognized when cash is collected
122
MODULE 4
CLOSING ENTRIES
Clean-Rite Service
The transactions for Clean-Rite Service for March 2000 have been recorded in the accounting system.
Clean-Rite Service is organized as a sole-proprietorship. This problem illustrates the preparation of closing
entries for March 2000. The trial balance for March 31, 2000, is given below:
CleanRiteService
TrialBalance
March31,2000
Accountname
Cash
Supplies
Equipment
Truck
NotesPayable
Lisa,Capital
Lisa,Drawings
ServiceRevenue
SuppliesExpense
Mar. 31
Mar. 31
Mar. 31
Mar. 31
DATE
Mar. 31
Mar. 31
Mar. 31
Mar. 31
Debit
$1,085
35
400
1,000
Credit
$1,750
500
100
450
$2,700
80
$2,700
Close the revenue accounts.

Close the expense accounts.
Close the Income Summary account.
Close the Drawings account.
ACCOUNT
Service Revenue
Income Summary
Income Summary
Supplies Expense
Income Summary
Lisa, Capital
Lisa, Capital
Lisa, Drawings
DEBIT
450
CREDIT
450
80
80
370
370
100
100
123
The transactions for Music Stop for April 2000 have been recorded in the accounting system. Music Stop
is organized as a corporation. This problem illustrates the preparation of closing entries. The trial balance
for April 30, 2000, is given below:
MusicStop
TrialBalance
April30,2000
Accountname
Debit
Cash
$36,400
Inventory
17,000
Equipment
12,000
AccountsPayable
NotePayable
CapitalStock
RetainedEarnings
SalesRevenue
CostofGoodsSold
3,000
SalariesExpense
1,000
UtilitiesExpense
100
$69,500
Apr. 30
Apr. 30
Apr. 30
DATE
2000
Apr. 30
Apr. 30
Apr. 30
Credit
$15,000
40,000
10,000
0
4,500
$69,500

ACCOUNT
Sales Revenue
Income Summary
Income Summary
Cost of Goods Sold
Salaries Expense
Utilities Expense
Income Summary
Retained Earnings
DEBIT
CREDIT
4,500
4,500
4,100
3,000
1,000
100
400
400
124
Practice Problem 1
Glenwood Nursery
The transactions for Music Stop for April 2000 have been recorded in the accounting system. Glenwood
Nursery is organized as a sole-proprietorship. This problem requires you to prepare closing entries for
Glenwood Nursery. The trial balance for April 30, 2000, is given below:
GlenwoodNursery
TrialBalance
April30,2000
Accountname
Cash
Inventory
Supplies
NotesPayable
John,Capital
John,Drawings
SalesRevenue
CostofGoodsSold
SuppliesExpense
Apr. 30
Apr. 30
Apr. 30
Apr. 30
Debit
$27,050
6,600
250
Credit
1,000
2,450
350
$37,700
$8,000
25,000
4,700
_______
$37,700

Close the income summary accounts.
Close the drawings accounts.
DATE
2000
Apr. 30
Apr. 30
Apr. 30
Apr. 30
ACCOUNT
Sales Revenue
Income Summary
Income Summary
Cost of Goods Sold
Supplies Expense
Income Summary
John, Capital
John, Capital
John, Drawings
DEBIT
CREDIT
4,700
4,700
2,800
2,450
350
1,900
1,900
1,000
1,000
125
Practice Problem 2
Country Fresh Farms Incorporated
June 30, 2000
The transactions for June 2000 for Country Fresh Farms Inc. have been recorded in the accounting system.
This problem requires you to prepare closing entries for Country Fresh Farms Inc. The trial balance for
June 30, 2000, is given below:
Country Fresh Farms Incorporated
TrialBalance
June30,2000
Accountname
Cash
Inventory
Supplies
AccountsPayable
CapitalStock
RetainedEarnings
Dividends
SalesRevenue
CostofGoodsSold
SalariesExpense
Jun. 30
Jun. 30
Jun. 30
Jun. 30
DATE
2000
Jun. 30
Jun. 30
Jun. 30
Jun. 30
Debit
$23,070
3,850
180
$1,400
20,000
2,100
Credit
1,000
15,000
6,400
4,000
$38,500
______
$38,500

Close the Dividends account.
ACCOUNT
Sales Revenue
Income Summary
Income Summary
Cost of Goods Sold
Salaries Expense
Income Summary
Retained Earnings
Retained Earnings
Dividends
DEBIT
CREDIT
15,000
15,000
10,400
6,400
4,000
4,600
4,600
1,000
1,000
126
Homework Problem 1
Cookies and More
Cookies and More sells cookies and baked products in a mall. Cookies and More is organized as a soleproprietorship. The transactions for December 2000 for Cookies and More have been recorded in the
accounting system. This assignment requires you to close the accounts for this period. The trial balance
for December 31, 2000, is given below:
CookiesandMore
TrialBalance
December31,2000
Accountname
Cash
Inventory
Supplies
AccountsPayable
NotePayable
Kelly,Capital
Kelly,Drawings
SalesRevenue
CostofGoodsSold
SuppliesExpense
Dec. 31
Dec. 31
Dec. 31
Dec. 31
DATE
2000
Dec. 31
Dec. 31
Dec. 31
Dec. 31
Debit
$16,230
4,750
270
Credit
$1,650
12,000
5,000
2,000
10,000
3,400
2,000
______________
$28,650
$28,650

ACCOUNT
DEBIT
Sales Revenue
Income Summary
Income Summary
Cost of Goods Sold
Supplies Expense
Income Summary
Kelly, Capital
Kelly, Capital
Kelly, Drawings
10,000
CREDIT
10,000
5,400
3,400
2,000
4,600
4,600
2,000
2,000
127
Homework Problem 2
Sullivan Sporting Goods
The transactions for June 2000 for Sullivan Sporting Goods have been recorded in the accounting system.
Sullivan Sporting Goods is organized as a sole-proprietorship. This assignment requires you to prepare
closing entries for June 2000. The trial balance for June 30, 2000, is given below:
SullivanSportingGoods
TrialBalance
June30,2000
Accountname
Cash
Inventory
Supplies
AccountsPayable
James,Capital
James,Drawings
SalesRevenue
CostofGoodsSold
UtilitiesExpense
SalariesExpense
Jun. 30
Jun. 30
Jun. 30
Jun. 30
DATE
2000
Jun. 30
Jun. 30
Jun. 30
Jun. 30
Debit
$17,680
12,150
320
Credit
$1,400
25,000
15,000
800
8,000
85
2,365_______
$41,400
$41,400

ACCOUNT
DEBIT
Sales Revenue
Income Summary
Income Summary
Cost of Goods Sold
Utilities Expense
Salaries Expense
Income Summary
James, Capital
James, Capital
James, Drawings
15,000
CREDIT
15,000
10,450
8,000
85
2,365
4,550
4,550
800
800
128
Homework Problem 3
Comfort Furniture
The transactions for August 2000 for Comfort Furniture have been recorded in the accounting system.
Comfort Furniture is organized as a corporation. This assignment requires you to prepare closing entries
for August 2000. The trial balance for August 2000 is given below:
ComfortFurniture
TrialBalance
August31,2000
Accountname
Debit
Credit
Cash
$30,815
AccountsReceivable
15,000
Inventory
32,000
Supplies
560
AccountsPayable
$10,600
CapitalStock
60,000
RetainedEarnings
3,000
Dividends
1,025
SalesRevenue
25,000
CostofGoodsSold
16,000
SalariesExpense
2,800
SuppliesExpense
400
$98,600
$98,600
Dec.31
Dec.31
Dec.31
Dec.31
DATE
2000
Aug. 31
Aug. 31
Aug. 31
Aug. 31

Close the income summary account.
Close the dividends account.
ACCOUNT
DEBIT
Sales Revenue
Income Summary
Income Summary
Cost of Goods Sold
Supplies Expense
Salaries Expense
Income Summary
Retained Earnings
Retained Earnings
Dividends
25,000
CREDIT
25,000
19,200
16,000
400
2,800
5,800
5,800
1,025
1,025
129
Homework Problem 4
APlus Hardware
The transactions for December 2000 for Aplus Hardware have been recorded in the accounting system.
Aplus Hardware is organized as a corporation. This assignment requires you to prepare closing entries for
December 2000. The trial balance for December 2000 is given below:
APlusHardware
TrialBalance
December31,2000
Account name
Cash
Inventory
Supplies
AccountsPayable
CapitalStock
RetainedEarnings
Dividends
SalesRevenue
CostofGoodsSold
SalariesExpense
SuppliesExpense
RentExpense
Dec. 31
Dec. 31
Dec. 31
Dec. 31
ACCOUNT
Dec. 31
Sales Revenue
Income Summary
Income Summary
Cost of Goods Sold
Supplies Expense
Salaries Expense
Rent Expense
Income Summary
Retained Earnings
Retained Earnings
Dividends
Dec. 31
Dec. 31
Credit
$2,800
45,000
0
1,025
12,500
7,000
1,150
225
800_______
$60,300
$60,300

Close the income summary account.
Close the dividends account.
DATE
Dec. 31
Debit
$35,800
14,100
$200
DEBIT
CREDIT
12,500
12,500
9,175
7,000
225
1,150
800
3,325
3,325
1,025
1,025
130
Homework Quiz
Closing Entries
1.
Which of the following statements about Closing Entries is true?

a.
Closing entries need not be journalized since company management knows they have been
taken into consideration.
b.
Closing entries need not be posted to the ledger accounts if the financial statements have
already been prepared.
c.
Closing entries are not required if adjusting entries have been prepared.
d.
Closing entries must be journalized and posted. 
2.
In a Sole Proprietorship, which of the following accounts is closed to Income Summary at the end
of the fiscal year?
a.
Drawing
b.
c.
Prepaid Expenses
d.
Supplies Expense
In a Sole Proprietorship, which of the following accounts will NOT be closed to Income Summary
at the end of the fiscal year?
a.
Salaries Expense
b.
Fees Earned
c.
Drawing
d.
4.
In a Corporation, which of the following accounts is closed at year-end?

a.
Capital Stock
b.
Prepaid Rent
c.
Dividends
d.
Accounts Payable
5.
In a Sole Proprietorship, which of the following accounts will be closed to Owner's Capital at the
end of the fiscal year?
a.
Salaries Expense
b.
Fees Earned
c.
Drawing
d.
6.
In a Sole Proprietorship, which of the following accounts will NOT be included in Closing Entries
at the end of the fiscal year?
a.
Drawing
b.
c.
Fees Earned
d.
Supplies Expense
7.
Which of the following correctly depicts a Closing Entry?

a.
Debit: Income Summary; Credit: Prepaid Insurance
b.
Debit: Prepaid Insurance; Credit: Income Summary
131
c.
d.
Debit: Insurance Expense; Credit: Income Summary

Debit: Income Summary; Credit: Insurance Expense
8.
Which of the following correctly depicts a Closing Entry?

a.
Debit: Income Summary; Credit: Unearned Revenue 
b.
Debit: Unearned Revenue; Credit: Income Summary 
c.
Debit: Fees Earned; Credit: Income Summary 
d.
Debit: Income Summary; Credit: Fees Earned 
9.
The Dividends account is:

a.
Closed to Owner's Capital by being credited.
b.
Closed to Retained Earnings by being credited.
c.
Closed to Owner's Capital by being debited.
d.
Closed to Retained Earnings by being debited.
10.
A summary of selected 2001 calendar year end ledger accounts for Fritz's Auto Services, a Sole
Proprietorship, appears below:
12/31
4,000| 1/1
| 12/31
6,000
14,000
6/30
11/30
2,000| 12/31
2,000|
4,000
12/31
12/31
10,000| 12/31
14,000|
24,000
Net income for the year ended December 31, 2001 is:
a.
$ 4,000
b.
$ 6,000
c.
$10,000
d.
$14,000
11.
A summary of selected 2001 calendar year end ledger accounts for Fritz's Auto Services, a Sole
12/31
4,000| 1/1
| 12/31
6,000
14,000
6/30
11/30
2,000| 12/31
2,000|
4,000
12/31
12/31
10,000| 12/31
14,000|
24,000
The 12/31 credit entry of $4,000 to Fritz, Drawing represents:

a.
Part of the entry required to close the Drawing account to Owner's Capital.
132
b.
c.
d.
12.
Part of the entry required to close the Drawing account to Income Summary.
Part of the entry required to close the Drawing account to Expenses.
A correction of the 6/30 entry in the Drawing account.
A summary of selected 2001 calendar year end ledger accounts for Schneider Car Care, a Sole
12/31
4,000| 1/1
| 12/31
6,000
26,000
6/30
11/30
2,000| 12/31
2,000|
4,000
12/31
12/31
10,000| 12/31
26,000|
36,000
Revenue for the year ended December 31, 2001 is:

a.
$10,000
b.
$26,000
c.
$36,000
d.
$46,000
13.
12/31
4,000| 1/1
| 12/31
6,000
26,000
6/30
11/30
2,000| 12/31
2,000|
4,000
12/31
12/31
10,000| 12/31
26,000|
36,000
Expense for the year ended December 31, 2001 is:

a.
$10,000
b.
$26,000
c.
$36,000
d.
$46,000
14.
12/31
4,000| 1/1
| 12/31
6,000
26,000
133
6/30
11/30
2,000| 12/31
2,000|
4,000
12/31
12/31
10,000| 12/31
26,000|
36,000
The ending balance in the Schneider, Capital account is:

a.
$28,000 credit
b.
$26,000 credit
c.
$22,000 credit
d.
$16,000 credit
15.
Aaron's, Inc. shows the following income statement for the year ended December 31, 2001:
Revenues:
Sales Revenue
Rent Revenue
$400,000
20,000
Interest Expense
Rent Expense
Utilities Expense
Salaries Expense
$ 10,000
10,000
30,000
260,000
$420,000
Expenses:
Net Income
310,000
$110,000
Based on this information, the entry to close Revenues and Expenses will include a:
a.
Credit to Retained Earnings for $110,000
b.
Debit to Retained Earnings for $110,000
c.
d.
16.
Aaron's, Inc. shows the following income statement for the year ended December 31, 2001:
Revenues:
Sales Revenue
Rent Revenue
$400,000
20,000
Interest Expense
Rent Expense
Utilities Expense
Salaries Expense
$ 10,000
10,000
30,000
260,000
$420,000
Expenses:
Net Income
Based on this information, the entry to close Revenues will include a:
a.
Credit to Sales Revenue for $310,000
b.
Debit to Rent Revenue for $400,000
c.
Credit to Sales Revenue for $420,000
d.
Debit to Sales Revenue for $400,000
134
310,000
$110,000
17.
The December 31, 2001, account balances prior to the preparation of Closing Entries for Jolly
Rancher Corporation follow:
Debit
$200
600
Cash
Store supplies
Service fees revenue
Retained earnings
Accounts payable
Dividends
Unearned service fees revenue
Wage Expense
Store supplies expense
Credit
$1,000
100
140
400
360
300
100
Based upon this information, after all closing entries have been made, the balance in Jolly
Rancher's Retained Earnings account will be:
a.
$700 credit
b.
$500 credit
c.
$300 credit
d.
$100 credit
18.
The December 31, 2001, account balances prior to the preparation of Closing Entries for Jolly
Rancher Corporation follow:
Debit
$200
600
Cash
Store supplies
Service fees revenue
Retained earnings
Accounts payable
Dividends
Unearned service fees revenue
Wage Expense
Store supplies expense
Credit
$1,000
100
140
400
360
300
100
Based upon this information, after all closing entries have been made, the balance in Jolly
Rancher's Dividends account will be:
a.
$700 debit
b.
$600 debit
c.
$400 debit
d.
$-019.
The balance in the Retained Earnings account is $37,000 on December 31, 2000. On December
31, 2001, the balance of Retained Earnings is $34,200. During 2001, dividends of $8,400 were
declared and paid. Based on this information, net income for 2001 is:
a.
$ 5,600
b.
$14,000
c.
$ 4,200
135
d.
$ 8,400
20.
On December 31, 2000, the balance in Pacman Inc.'s Retained Earnings account is $43,000. On
December 31, 2001, the balance is $44,000. During 2001, dividends of $10,400 were declared and
paid. Based on this information, Net Income for 2001 is:
a.
$ 3,400
b.
$13,800
c.
$ 7,000
d.
$11,400
21.
For a corporation, which of the following accounts are affected by the closing process?
a.
Capital Stock
b.
Cash
c.
Revenue
d.
Accounts Payable
22.
Which of the following types of accounts is not affected by the closing process?
a.
Revenue
b.
Expense
c.
Drawings
d.
Cash
23.
For sole-proprietorships, the balance in the Drawings account is transferred to:

a.
Capital
b.
Retained Earnings
c.
Capital Stock
d.
Drawings
24.
For corporations, the balance in the Dividends account is transferred to:

a.
Capital
b.
Retained Earnings
c.
Capital Stock
d.
Drawings
25.
After closing the revenue and expense accounts, the balance in the Income Summary account
equals:
a.
Zero
b.
Net Income
c.
Revenues
d.
Expenses
26.
At the end of the closing process, the balance in the Income Summary account equals:
a.
Zero
b.
Net Income
c.
Revenues
d.
Expenses
27.
A business has earned revenues of $3,500 during a period. To close the revenue account we must:
a.
debit Revenue; credit Income Summary
b.
debit Income Summary; credit Revenue
c.
debit Capital ; credit Revenue
d.
debit Revenue; credit Capital
136
28.
A Corporation has earned revenues of $3,500. Expenses for the month equal $1,800. The
beginning balance in Capital Stock was $10,000 and in Retained Earnings was $1,000. No
dividends were paid. After closing the balances in the Capital Stock and Retained Earnings
accounts are:
a.
$11,700; $1,000
b.
$10,000; $2,700
c.
$11,700; $2,700
d.
$12,700; $0
29.
A sole-proprietorship has earned revenues of $4,500. Expenses for the month equal $2,000. The
owner withdrew $500 for personal expenses. The beginning balance in the Capital account was
$10,000. After closing the balances in the Capital and Drawings accounts are:
a.
$12,000; $0
b.
$12,500; $500
c.
$10,000; $3,000
d.
$13,000; $0
30.
A Corporation earned a net income of $2,000. Assume that the revenue and expense accounts have
been closed to Income Summary. To close the Income Summary account:
a.
Capital account is credited
b.
Retained Earnings is credited
c.
Capital Stock is debited
d.
Income Summary is credited
137

Accounting Question

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MODULE 4

ADJUSTING AND CLOSING ENTRIES - ACCRUALS

Wages of $650 for December will be paid in January.

Advertising costs of $105 for December will be paid in January.

Wages owed but unpaid at the end of December were $5,000.

Service provided to a customer for $350 has not been recorded.

Advertising cost of $90 for December has not been recorded.

$15,000 was borrowed by signing a 10%, 2 year note on September 1, 2000.

Employee wages of $950 for December will be paid in January.

Advertising costs of $95 for December will be paid in January.

Instructors salaries of $2,000 for December will be paid in January.

December fees of $160 will be collected in January.

$85 will be paid in January for advertising in December.

$115 will be paid in January for advertising in December.

$1,080 of salaries earned by employees during December will be paid in January.

Employee wages of $750 for December will be paid in January.

Advertising costs of $135 for December will be paid in January.

Employee wages of $1,150 for December will be paid in January.

Advertising costs of $115 for December will be paid in January.

Accrued Expenses usually appear on the Balance Sheet as:

Accrued Revenue is recorded when:

Accrued Revenue usually appears on the Balance Sheet as:

Interest Payable ..................

If Rental Services takes no action on any of the above items:

Accrued expenses occur when:

Six months' rent of $7,200 was paid in advance on October 1, 2000.

Advance payments for services are called:

Depreciation Expense and Accumulated Depreciation are classified, respectively, as:

Debit: Supplies Expense ..................

Rent Expense is debited

Which of the following statements is true about deferred revenues?

Close the revenue accounts.

Close the revenue accounts.

Close the revenue accounts.

Close the revenue accounts.

Close the revenue accounts.

Close the revenue accounts.

Close the revenue accounts.

Close the revenue accounts.

Which of the following statements about Closing Entries is true?

In a Corporation, which of the following accounts is closed at year-end?

Which of the following correctly depicts a Closing Entry?

Debit: Insurance Expense; Credit: Income Summary

Which of the following correctly depicts a Closing Entry?

The Dividends account is:

The 12/31 credit entry of $4,000 to Fritz, Drawing represents:

Revenue for the year ended December 31, 2001 is:

Expense for the year ended December 31, 2001 is:

The ending balance in the Schneider, Capital account is:

For sole-proprietorships, the balance in the Drawings account is transferred to:

For corporations, the balance in the Dividends account is transferred to:

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