23) On November 1, Jovel Company loaned another company $100,000 at a 6.0% inter

Question

23) On November 1, Jovel Company loaned another company $100,000 at a 6.0% interest 23) rate. The note receivable plus interest will not be collected unil March of the following year. The company's annual accounting period ends on December 31. The amount of interest revenue that should be reported in the first year is: A) $6,000 B) S16,667 C) $1,000 D) SO. E) $5,000. 24) On December 31, Winters Company received a $385 bill for the purchase of supplies in 24) December thatit will not pay for until January 15. Winters follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. The adjusting entry needed on December 31 to accrue this cost is: A) Debit Supplies Expense S385; credit Cash $385 B) Debit Accounts Payable S385; credit Cash S385. C) Debit Accounts Payable S385; credit Supplies $385 D) Debit Supplies S385; credit Accounts Payable $385 E) Debit Supplies Expense S385; credit Supplies S385. 25) Which of the following is the usual final step in the accounting cycle? 25) A) Preparing an adjusted trial balance B) Journalizing transactions. C) Preparing a post-closing trial balance. D) Preparing the financial statements. E) Preparing a work sheet. 26) If throughout an accounting period the fees for legal services paid in advance by clients 26) are recorded in an account called Unearned Legal Fees, the end-of-period adjusting entry to record the portion of those fees that has been earned is: A) Debit Unearned Legal Fees and credit Legal Fees Earned. B) Debit Unearned Legal Fees and credit Accounts Reccivable. C) Debit Cash and credit Legal Fees Earned. D) Debit Cash and credit Unearned Legal Fees. E) Debit Legal Fees Earned and credit Uncamed Legal Fees. 27) On April, a company paid the $1,350 premium on a three-year insurance policy with 27) benefits beginning on that date. What amount of the insurance expense will be reported on the annual income statement for the year ended December 31? A) S37.50, B) S1,350.00 C) $337.50. D) $450.00 E) S1,012.50

Explanation / Answer

23) C) 1000 Revenue for two months Nov-Dec, 100000*6%*2/12=1000 24) D) Debit Supplies $385, credit Accounts Payable $385 25) D) Preparing the financial statements This is because after finalising every account, finally financial statements are made. 26) A) Debit Unearned Legal Fees and credit Legal Fees Earned Here, the liability of advance revenue in Unearned legal fees get debited and Earned revenue as "Legal Fees Earned" is credited and revenue is booked. 27) C) $337.50 Nine months from Apr to Dec has to be claimed as insurance expense. 1350 * 9/36 = $337.50

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