On November 1, $4,800 of rent on equipment for the next six months was paid and charged to Prepaid Rent. At the end of the year, the financial statements would report:

A) Rent Expense, $4,800; Prepaid Rent $0.

B) Rent Expense, $1,600; Prepaid Rent $3,200.

C) Rent Expense, $1,600; Prepaid Rent $4,800.

D) Rent Expense, $3,200; Prepaid Rent $1,600.

Answer: B

Prior to adjusting entries, Salaries Expense had a balance of $22,300. The following year-end adjusting entry was made by the company:

Salaries Expense 4,400

Salaries Payable 4,400

What balance would be shown for Salaries Expense in the adjusted trial balance?

A) $4,400.

B) $17,900.

C) $22,300.

D) $26,700.

Answer: D

Prior to adjusting entries, Prepaid Rent had a balance of $8,300. The following year-end adjusting entry was made by the company:

Rent Expense 6,800

Prepaid Rent 6,800

What balance would be shown for Prepaid Rent in the adjusted trial balance?

A) $1,500.

B) $6,800.

C) $8,300.

D) $15,100.

Answer: A

A company provides maintenance services to customers. The company's policy is to provide services and then bill customers

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

At the beginning of December, Global Corporation had $2,000 in supplies on hand. During the month, supplies purchased amounted to $3,000, but by the end of the month the supplies balance was only $800. What is the appropriate month-end adjusting entry?

A) Debit Cash $4,200, credit Supplies $4,200.

B) Debit Supplies $4,200, credit Supplies Expense $4,200.

C) Debit Supplies Expense $4,200, credit Supplies $4,200.

D) Debit Cash $800, credit Supplies $800.

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, 2021?

A) Debit Depreciation Expense and credit Cash for $72,000.

B) Debit Depreciation Expense and credit Accumulated Depreciation for $72,000.

C) Debit Equipment and credit Depreciation Expense for $4,500.

D) Debit Depreciation Expense and credit Accumulated Depreciation for $4,500.

Answer: D

During the year, Cheng Company paid salaries of $24,000. In addition, $8,000 in salaries has accrued by the end of the year but has not been paid. The year-end adjusting entry would include which one of the following?

A) Debit to Salaries Expense for $32,000.

B) Credit to Salaries Expense of $8,000.

C) Debit to Salaries Payable for $24,000.

D) Credit to Salaries Payable for $8,000.

Answer: D

On September 1, 2021, Gold Gaming sold 400 one-year subscriptions to its online gaming website for $90 each. The total amount received was credited to Deferred Revenue. What would be the required adjusting entry at December 31, 2021?

A) Debit Deferred Revenue and credit Service Revenue for $36,000.

B) Debit Service Revenue and credit Deferred Revenue for $24,000.

C) Debit Deferred Revenue and credit Service Revenue for $24,000.

D) Debit Deferred Revenue and credit Service Revenue for $12,000.

Answer: D

A company has a policy of paying salaries for contract labor on the 15th of the month following the labor services received. In December 2021, the company recorded $15,000 paid in salaries for labor services received in November 2021. In addition, labor services received in December 2021 were $12,000 and will be paid by the company on January 15, 2022. What adjusting entry will the company record on December 31, 2021?

A) Debit Salaries Expense and credit Salaries Payable for $27,000.

B) Debit Salaries Expense and credit Cash for $15,000.

C) Debit Salaries Expense and credit Salaries Payable for $12,000.

D) Debit Salaries Expense and credit Salaries Payable for $3,000.

Answer: C

PrimeFlix sells one-year online subscriptions for viewing classic movies. Customers are required to pay for the subscription at the beginning of the subscription period. On April 1, 2021, total sales of one-year subscriptions are $12,000. What adjusting entry does PrimeFlix need to record on December 31, 2021?

A) Debit Deferred Revenue and credit Service Revenue for $9,000.

B) Debit Deferred Revenue and credit Service Revenue for $12,000.

C) Debit Service Revenue and credit Deferred Revenue for $9,000.

D) Debit Service Revenue and credit Deferred Revenue for $12,000.

Answer: A

The employees of Neat Clothes work Monday through Friday. Every other Friday the company issues payroll checks totaling $32,000

The employees of Neat Clothes work Monday through Friday. Every other Friday the company issues payroll checks totaling $32,000 (or $3,200 per weekday). The current pay period ends on Friday, January 3. Neat Clothes is now preparing financial statements for the year ended December 31. What is the adjusting entry to record accrued salaries at the end of the year?

A) Debit Salaries Payable and credit Salaries Expense for $22,400.

B) Debit Salaries Expense and credit Salaries Payable for $6,400.

C) Debit Salaries Expense and credit Salaries Payable for $9,600.

D) Debit Salaries Expense and credit Salaries Payable for $22,400.

Answer: D

A company receives a utility bill each month for services received. The company's policy is to pay the utility bill within 30 days of receipt. On December 31, 2021, the company receives a utility bill of $4,200 for the month of December and plans to pay the bill by January 30, 2022. What adjusting entry, if any, will the company record on December 31, 2021?

A) Debit Utilities Expense and credit Cash for $4,200.

B) Debit Utilities Expense and credit Utilities Payable for $4,200.

C) Debit Utilities Payable and credit Utilities Expense for $4,200.

D) No adjusting entry is necessary at the end of the year.

Answer: B

A company owes employee salaries of $16,000 at the end of the year. These salaries will be paid in the following year. What adjusting entry, if any, does the company need to record at the end of the year?

A) Debit Salaries Expense and credit Cash for $16,000.

B) Debit Salaries Expense and credit Salaries Payable for $16,000.

C) Debit Salaries Payable and credit Salaries Expense for $16,000.

D) No adjusting entry is necessary at the end of the year.

Answer: B

Yummy Foods purchased a one-year hazard insurance policy on August 1 and recorded the $4,200 premium to prepaid insurance

Yummy Foods purchased a one-year hazard insurance policy on August 1 and recorded the $4,200 premium to prepaid insurance. At its December 31 year-end, Yummy Foods would record which of the following adjusting entries?

A) Debit Insurance Expense and credit Prepaid Insurance for $1,750.

B) Debit Prepaid Insurance and credit Insurance Expense for $1,750.

C) Debit Insurance Expense and credit Accounts Payable for $4,200.

D) Debit Insurance Expense and credit Prepaid Insurance for $2,450.

Answer: A

At the beginning of the year, a company had a balance in its prepaid insurance account of $48,400. During the year, $86,000 was paid for insurance. At the end of the year, after adjusting entries were recorded, the balance in the prepaid insurance account was $42,000. Insurance expense for the year would be:

A) $92,400.

B) $86,000.

C) $134,400.

D) $6,400.

Answer: A

A company purchased $270,000 in supplies during the year. The supplies account increased by $10,000 during the year to an ending balance of $66,000. For what amount was the adjusting entry to supplies expense?

A) $300,000.

B) $280,000.

C) $260,000.

D) $240,000.

Answer: C

When a company makes an end-of-period adjusting entry, which includes a debit to Supplies Expense, the usual credit entry is made to:

A) Accounts Payable.

B) Supplies.

C) Cash.

D) Retained Earnings.

Answer: B

When a company makes an end-of-period adjusting entry that includes a credit to Prepaid Rent, the debit is usually made to:

A) Cash.

B) Rent Expense.

C) Rent Payable.

D) Rent Receivable.

Answer: B

Which of the following would not typically be used as an adjusting entry?

A) Debit Rent Expense and credit Prepaid Rent.

B) Debit Cash and credit Deferred Revenue.

C) Debit Interest Expense and credit Interest Payable.

D) Debit Deferred Revenue and credit Service Revenue.

Answer: B