A company provides maintenance services to customers. The company's policy is to provide services and then bill customers on the 10th of the following month. In December 2021, the company provided services of $14,000 and plans to bill customers on January 10, 2022. What adjusting entry, if any, will the company record on December 31, 2021?
A) Debit Accounts Receivable and credit Deferred Revenue for $14,000.
B) Debit Accounts Receivable and credit Service Revenue for $14,000.
C) Debit Service Revenue and credit Accounts Receivable for $14,000.
D) No adjusting entry is necessary at the end of the year.
Answer: B
On November 1, 2021, a company signs a one-year contract to provide services. The agreement specifies payments of $4,500 to be received every three months for a total of $18,000 over the entire year ($1,500 per month). No entry is made on November 1, 2021, at the time the contract is signed. What adjusting entry does the company need to record at the end of the year?
A) Debit Accounts Receivable and credit Service Revenue for $15,000.
B) Debit Service Revenue and credit Accounts Receivable for $12,000.
C) Debit Accounts Receivable and credit Service Revenue for $3,000.
D) Debit Accounts Receivable and credit Service Revenue for $18,000.
Answer: C
On October 1, 2021, a company purchases equipment for $72,000. The equipment is expected to be used for the next four years (48 months). What adjusting entry should the company record on December 31, 2022?
A) Debit Depreciation Expense and credit Accumulated Depreciation for $13,500.
B) Debit Depreciation Expense and credit Accumulated Depreciation for $18,000.
C) Debit Depreciation Expense and credit Accumulated Depreciation for $22,500.
D) Debit Depreciation Expense and credit Accumulated Depreciation for $4,500.
Answer: B
