1. A company whichsells and services medical insurance policies received one pay
ID: 2433813 • Letter: 1
Question
1. A company whichsells and services medical insurance policies received one paymentof $14,000 cash from a customer for insurance coverage for the nexttwo years. Recording the receipt of this cash when it is receivedwill require which of the following?
A) Withdrawals to be debited, anasset to be credited
B) A liability to be debited, anasset to be credited
C) An asset to be debited, capitalto be credited
D) An asset to be debited, aliability to be credited
E) One asset to be debited,another asset to be credited
2. Phillip Atwoodreceived $5,000 cash immediately after he completed excavation workfor a local home builder. This lot will be used by the builder as asite for a home to be constructed which will be for sale. How wouldthis transaction be recorded BY THE HOME BUILDER?
A) An asset to be debited, aliability to be credited
B) A liability to be debited, anasset to be credited
C) Withdrawal to be debited, anasset to be credited
D) An asset to be debited, revenueto be credited
E) One asset is debited whileanother asset is credited.
3. Which of thefollowing is not correct with regard to how each item is increasedor decreased, and its normal balance?
Item Increases Decreases NormalBalance
A. Assets debit creditcredit
B. Liabilities credit debitcredit
C. Expenses debit creditdebit
D. Revenue credit debitcredit
E. Capital credit debitcredit
A) Option A
B) Option B
C) Option C
D) Option D
E) Option E
4. At the beginning ofthe year, a business had a three-year, $2,520 insurance policy onits office equipment which is the balance in the Prepaid Insuranceaccount. On July 1, it purchased a three-year, $3,600 policy on anewly constructed building and debited this amount to PrepaidInsurance. Which of the following will be the December 31,year-end, adjusting entry?
A) Insurance Expense, debit,$6,120; Prepaid Insurance, credit, $6,120
B) Insurance Expense, debit,$2,400; Prepaid Insurance, credit, $2,400
C) Prepaid Insurance, debit,$1,440; Cash, credit, $1,400
D) Insurance Expense, debit,$1,440; Prepaid Insurance, credit, $1,440
E) None of the journal entries inthis group
5. At the end of thefiscal year, an adjusting entry was made for accrued salaries of$2,000. The salaries for one week, $4,250, were paid on the firstFriday of the new fiscal period. When the weekly salaries are paidon the first Friday of the new accounting period, what will be thegeneral journal entry?
A) Salaries Expense, debit,$4,250; Cash, credit, $4,250
B) Salary Exp., debit, $2,000;Cash, credit, $2,000
C) Salaries Expense, debit,$4,250; Salaries Payable, credit, $4,250
D) Salary Exp., debit, $2,250;Salaries Payable, debit, $2,000; Cash, credit,$4,250
E) None of the journal entriesshown above
Apr. 1 Beginning Inventory 10 units @$120
5 Purchase 60 units @ $112
14 Sale 40 units
21 Purchase 30 units @ $116
30 Sale 28 units
Reference: Ref 10-7
Assuming that a perpetual inventory system isused, what is ending inventory (rounded) under the average-costmethod?
A) $3,666
B) $3,712
C) $7,734
D) $3,208
19. Use the following inventoryinformation for the month of April to answer the question(s)below.
Apr. 1 Beginning Inventory 10 units @$120
5 Purchase 60 units @ $112
14 Sale 40 units
21 Purchase 30 units @ $116
30 Sale 28 units
Reference: Ref 10-7
Assuming that a perpetual inventory system isused, what is ending inventory on a FIFO basis?
A) $7,696
B) $3,704
C) $3,664
D) More information is needed.
20. Apr. 1 Inventory 200 units @$6.00
6 Purchase 300 units @ $6.60
13 Purchase 100 units @ $7.20
20 Purchase 200 units @ $7.80
25 Purchase 40 units @ $8.40
Sale 620 units
A perpetual inventory system is used.
Reference: Ref 10-4
Using LIFO, cost of goods sold is
A) $4,464.
B) $4,056.
C) $1,740.
D) $1,332.
Explanation / Answer
2. C) Withdrawal to be debited, an asset to becredited 3. B) Option B 4. D) Insurance Expense, debit, $1,440; PrepaidInsurance, credit, $1,440 5. A) Salaries Expense, debit, $4,250; Cash, credit,$4,250 18. A) $3,666 19. B) $3,704 20. A) $4,464.Related Questions
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